Perhaps because it addresses the usually unexciting topic of forum non conveniens, a recent decision by Vice Chancellor Laster has flown largely under the radar. In Focus Financial Partners, LLC v. Holsopple, C.A. No. 2020-0188-JTL (Nov. 2, 2020), the Court issued a characteristically in-depth analysis of that sleepy doctrine in a case involving claims relating to the enforcement of a noncompete.
The Delaware Supreme Court reversed a decision of the state’s Superior Court, holding that an appraisal action arising from Vista Equity Partners’ acquisition of Solera Holdings, Inc. (Solera) did not fall within the definition of a “Securities Claim” for the purposes of coverage under Solera’s primary and excess directors’ and officers’ insurance policies (D&O Policies). The decision cautions that such policies should be carefully reviewed on a periodic basis, and that would-be buyers should do the same during diligence.
The Delaware Supreme Court recently reaffirmed that, absent significant market or process concerns, deal price should be a significant (if not outcome-determinative) factor in the appraisal of Delaware corporations.
In 2017, Sibayne Gold, Ltd. (Sibayne) acquired Stillwater Mining Co. (Stillwater) in a reverse triangular merger that entitled the holder of each Stillwater share to $18 of merger consideration at closing. Petitioners, former Stillwater stockholders, perfected their appraisal rights — a judicial determination of the “fair value” of their holdings — and argued that a flawed deal process made the $18 per share deal price unreliable. This included an increase in commodity prices between signing and closing that increased Stillwater’s value by nine percent.
The Court of Chancery recently allowed to proceed post-closing claims that a merger was completed at an inadequate price, premised largely on allegations that the Company’s CEO and chairman was conflicted and tilted the process in favor of the buyer. This decision serves as a reminder for fiduciaries considering end stage transactions — including the Court’s reminder that “the sins of just one fiduciary can support a viable Revlon claim.”