Saturday, November 23, 2013

In re The Topps Company Shareholders Litigation case brief

In re The Topps Company Shareholders Litigation case brief summary
926 A.2d 58 (2007)

Plaintiffs, the stockholder and the competing bidder, filed a motion against defendants, the target corporation and its principals, for a preliminary injunction against the procession of a merger vote regarding a private equity acquisition of the target corporation by a management-friendly bidder.

The management-friendly bidder entered into an agreement to acquire the target corporation and retain its management. The competing bidder, which was a competitor of the target corporation, bid for the corporation during a go shop period and entered into a standstill agreement with the corporation under which it was not to disclose information about the corporation. The target corporation's board disseminated proxy materials for a vote on the merger with the management-friendly bidder that characterized the competing bidder's conduct and its offers in a bad light, but refused to release the competing bidder from the standstill agreement.


  • The court found that the issuance of an injunction was proper because the competing bidder established a reasonable probability of success that the corporation's board was breaching its fiduciary duties by misusing the standstill agreement to prevent the competing bidder from communicating with the corporation's stockholders and presenting a bid that the stockholders could have found more favorable than the proposed merger. 
  • Likewise, the competing bidder showed a likelihood of success on its claim that the proxy statement was materially misleading.

The motion for a preliminary injunction was granted. The merger vote was enjoined until after the target corporation had granted the competing bidder a waiver of the standstill agreement to make a tender offer, and allowed the competing bidder to communicate with thecorporation's stockholders about the competing bidder's version of relevant events.

Recommended Supplements for Corporations and Business Associations Law

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