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MONTH-IN-BRIEF (Oct 2019)

M&A Law

Delaware Supreme Court Rules that “Novel” Disclosure Issue Is Not Ripe for Review

By Mary Lindsey Hannahan

On October 14, 2019, the Delaware Supreme Court (the “Court”) refused to revive an investor suit arising out of the August 2014 acquisition of DAVA Pharmaceuticals, Inc. (“DAVA”), by Endo Pharmaceuticals, Inc. (“Endo”). The Court ruled that The Cirillo Family Trust (the “Trust”), which owned about 0.27% of DAVA’s shares as of the merger, failed to show that the Court should overturn the Chancery Court’s opinion, affirming summary judgment in favor of DAVA and its directors.

The Trust argued that the corporation surviving the merger, in addition to DAVA’s board of directors, owed a duty to disclose all material information to stockholders of the surviving corporation. The disclosure would enable the stockholders to make an informed decision on whether to exercise their appraisal rights.

However, the Court characterized this additional disclosure requirement as a “novel question,” and held that it was not ripe for review. The Court reasoned that because the Trust had not attempted to bring a claim of breach of the duty to disclose against DAVA or its successor, the Chancery Court appropriately declined to rule on the issue.

Delaware Chancery Court Finds No Separate Class Voting Right in Merger Suit

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