Cox Communications, Inc. Shareholders Litigation, In re case brief
summary
879 A.2d 604 (2005)
CASE FACTS
The family's proposal was conditioned on agreement to final merger terms with a special committee of independent directors. After negotiations, the family and the committee reached tentative agreement on a merger at $ 34.75 per share, subject to approval by a majority of the minority stockholders. Initially, the court found that complaints challenging fully negotiable, all cash, all shares merger proposals by controlling stockholders were not meritorious when filed under the Chrysler Corp. v. Dann standard.
DISCUSSION
CONCLUSION
The court granted an award of fees and expenses to the shareholders of $ 1.275 million to be paid by the family's holding corporation in accordance with the stipulation of settlement.
Recommended Supplements for Corporations and Business Associations Law
879 A.2d 604 (2005)
CASE SYNOPSIS
After defendants, a family and its
holding company (family), proposed to enter into a merger whereby
they would buy all the public's shares in their corporation,
plaintiff shareholders requested an attorney's fee award of $ 4.95
million. The family owned a controlling interest in the corporation.CASE FACTS
The family's proposal was conditioned on agreement to final merger terms with a special committee of independent directors. After negotiations, the family and the committee reached tentative agreement on a merger at $ 34.75 per share, subject to approval by a majority of the minority stockholders. Initially, the court found that complaints challenging fully negotiable, all cash, all shares merger proposals by controlling stockholders were not meritorious when filed under the Chrysler Corp. v. Dann standard.
DISCUSSION
- The court determined that the fee sought was in excess of what could reasonably be justified.
- Because the Kahn v. Lynch Communication Systems, Inc. standard made it impossible for a controlling stockholder ever to structure a transaction to obtain dismissal of a complaint challenging the transaction, each such case had settlement value, and there was an incentive to settle non-meritorious, premature suits attacking negotiable, going-private proposals.
- Therefore, the court awarded a substantially smaller fee than the shareholders requested as they had taken no appreciable risk because they knew the family would have to materially increase its bid to satisfy the special committee.
CONCLUSION
The court granted an award of fees and expenses to the shareholders of $ 1.275 million to be paid by the family's holding corporation in accordance with the stipulation of settlement.
Recommended Supplements for Corporations and Business Associations Law
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