Mergers & Acquisitions

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Reed Smith LLP

Chauncey Lane

Executive Editor, Mergers & Acquisitions

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MONTH-IN-BRIEF (Sep 2021)

[lwptoc]

Domestic M&A

Delaware Chancery Court Orders Stockholders’ Derivative Claim Challenging 2017 Merger to Proceed

By Dixon Babb

On September 21, 2021, the Delaware Court of Chancery (the “Court”) ordered that a stockholder suit accusing the defendants of setting up an overpriced, $875 million deal would proceed to trial. The claim arose out of the 2017 acquisition of Berkeley Point Financial LLC, a designated underwriting and servicing lender for multi-family and commercial mortgages (“Berkeley”), by BGC Partners, Inc., a provider of brokerage and financial services (“BGC”). BGC paid $875 million to purchase Berkeley from Cantor Commercial Real Estate Company, L.P. (“CCRE”). Howard Lutnick, BGC’s chairman and CEO, was the controlling stockholder of both BGC and CCRE (the latter through his control of Cantor Fitzgerald, L.P., a financial services firm). The plaintiffs claimed Lutnick, who was on both sides of the transaction, caused BGC to overpay for Berkeley, which resulted in massive gains for Lutnick because his economic interest in Berkeley was greater than his interest in BGC.

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