Mergers & Acquisitions

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Holland & Knight LLP

Chauncey Lane

Executive Editor, Mergers & Acquisitions
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Domestic M&A

Delaware Supreme Court confirms that receipt of a pre-closing dividend conditioned on the closing of a merger transaction does not result in the abandonment of a stockholder’s appraisal right.

By: Chauncey Lane, Partner, Holland & Knight LLP

In In re GGP, Inc. Stockholder Litigation, No. 202, 2021 (Del. July 19, 2022) Plaintiffs alleged that the merger was structured to eliminate the statutory appraisal rights of the Company’s stockholders and that the proxy disclosures regarding appraisal rights were misleading. The Delaware Court of Chancery had dismissed the claims. On appeal, the Delaware Supreme Court affirmed the dismissal of the claim alleging an improper merger structure because “defendants did not, by paying a large portion of the merger consideration by way of a pre-closing dividend, structure the merger in a manner that effectively and unlawfully eliminated appraisal rights.” However, the Court reversed the dismissal of the disclosure claim because it found the complaint adequately alleged that defendants “consciously crafted the transaction and the related disclosures in such a way as to deter [the Company’s] stockholders from exercising their appraisal rights.”

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