Category: Deal Litigation

Keeping Up with Delaware Appraisal Jurisprudence Since Aruba: Deal Price Reigns Supreme, But Will Recent Decision Lead to More Arbitrage?

In a string of seminal decisions from 2017 through 2019 (DFC Global, Dell and Aruba), the Delaware Supreme Court re-shaped appraisal jurisprudence, in each case by overturning the Court of Chancery for failing to give adequate weight to deal price as the most reliable indicator of fair value. In the […]

Have Your Cake, and Closing Too: Invoking Prevention Doctrine, Delaware Chancery Court Grants Seller’s Request for Specific Performance in COVID-Related M&A Dispute

Chancellor McCormick’s opinion in Snow Phipps Group, LLC, et al. v. KCake Acquisition, Inc., et al. (Del. Ch. April 30, 2021) is 125 pages long, but she helpfully digests the holding in a single sentence on page 3: “Chalking up a victory for deal certainty, this post-trial decision resolves all […]

Delaware Puts the Conduct of Business Covenant on Center Stage in COVID-Related M&A Dispute

In the months following the onset of the COVID-19 pandemic, a slew of parties filed lawsuits in US courts relating to M&A transactions that were signed prior to March 2020 and that buyers were seeking to terminate as a result of the pandemic. In these lawsuits, buyers commonly alleged one […]

Pandemic-Related Deal Litigation Highlights Buyer Leverage in Transactions Requiring Debt Financing

In a May blog post we discussed several initial observations regarding the dozens of M&A transactions that were signed prior to March 2020 and that were in jeopardy as a result of COVID-19. Since that post, the Delaware Chancery Court has had the opportunity to consider some preliminary issues relating […]

Long-Term Focus: Preparing for Activism + Takeovers Amid COVID-19 Risks

Last week we cautioned that market volatility resulting from the COVID-19 pandemic could lead to increasing levels of shareholder activism and unsolicited takeover offers. Although the pandemic has raised countless new risks, companies remain vulnerable to activism attacks that focus on short-term objectives and opportunistic takeover bids stemming from the […]

How much disclosure of deal dirty laundry is necessary in order to fully inform a Corwin/Volcano cleansing vote?

In Elizabeth Morrison v. Ray Berry et. al., (dated July 9, 2018), the Delaware Supreme Court reversed the Delaware Chancery Court’s dismissal of deal litigation based on obtaining a cleansing vote under Corwin/Volcano because the defendants failed to show “as required under Corwin” that the vote was fully informed. The […]

Ninth Circuit Rules Tender Offer Disclosure Challenges Do Not Require Proof of Intent to Deceive

On April 20, 2018, the Ninth Circuit ruled that shareholder claims for false or misleading tender offer disclosures under Section 14(e) of the Securities Exchange Act of 1934 require a mere showing of negligence, rather than fraudulent intent (scienter). This holding departs from longstanding rulings by five other federal appeals […]

Delaware Supreme Court Reverses Dell’s Merger Appraisal Price Bump

On December 14, 2017, the Delaware Supreme Court reversed and remanded the Court of Chancery’s appraisal of the fair value of Dell Inc. The trial court’s 2016 ruling, which found that a $25 billion management-led buyout undervalued the computer giant by about $7 billion, sent shock waves across the M&A landscape […]

M&A Lessons Learned from the Blocked Chinese Acquisition of Lattice Semiconductor

Last week, President Trump issued an Executive Order prohibiting the acquisition of Lattice Semiconductor Corporation (Lattice), a US computer chip manufacturer, by a Chinese investor. The president’s order blocking the transaction was based on a recommendation by the Committee on Foreign Investment in the United States (CFIUS), an interagency committee […]

Martha Stewart Decision Draws Roadmap for Controller Sales to Third Parties

A transaction involving a controlling stockholder on both sides of the deal presents a clear conflict of interest that will result in heightened scrutiny under the “entire fairness” standard of review if later challenged. However, there is not always a conflict when the controller stands on just one side of […]

$2 Billion Purchase Price Dispute Over GAAP Compliance Highlights Need for Careful Drafting

Purchase price adjustments are common features (2015 SRS study: 77% of deals) of private merger agreements that are generally intended to ensure that the acquired company will have the same level of cash or working capital to operate the business post closing that it had at signing. However, if not […]