Defendants requested that the Court dismiss Plaintiff’s claims for failure to state a claim. In issuing its opinion, the Court highlighted the difference between the requirements to sustain a disclosure claim brought prior to the closing of the transaction (a “Pre-Closing Claim”) and one brought subsequent to the transaction’s closing (a “Post-Closing Claim”). While in a Pre-Closing Claim, a plaintiff must demonstrate a “reasonable likelihood of proving that the alleged omission or misrepresentation is material,” with a Post-Closing Claim a plaintiff “must allege facts making it reasonably conceivable that there has been a non-exculpated breach of fiduciary duty by the board in failing to make a material disclosure.” Since Millennial’s Certificate of Incorporation provided exculpation for duty-of-care claims, Plaintiff was required to show either that a majority of the Board was neither disinterested nor independent or … [Read more...] about Delaware Chancery Court Dismisses Post-Closing Disclosure Claims Against Directors of Millennial Media, Inc
Laker incorporated post closing trial balance
Generally, earnout provisions are not readily accepted by a seller because of the myriad of potential issues that affect the calculation of the additional “earnout” consideration. One such issue is how the business of the target company is conducted post-closing. The purchaser will want complete discretion on how to operate the target or acquired company post-closing and will not want to undertake an obligation to maximize the earnout payment. The seller, on the other hand, is usually quite uncomfortable with allowing the purchaser such complete control. After all, the business may have performed very well prior to the sale and the seller will want the acquired company operated in the ordinary course in accordance with past practice. Horizon Holdings, LLC v. Genmar Holdings, Inc., 244 F. Supp. 2d 1250 Kan. 2003 involves a disputed earnout provision. … [Read more...] about Earnout Transactions: The Importance of Providing Post Closing Operating Standards for the Acquired Company
In Larkin, Vice Chancellor Slights applied the cleansing effect recognized in Corwin more broadly. There, plaintiffs brought a putative class action complaint challenging the sale of Auspex Pharmaceuticals, Inc. to Teva Pharmaceuticals Industries, Inc. Plaintiffs alleged that certain members of the Auspex board, including the leader of Auspex’s negotiation team, had ties to venture capital firms owning a significant percentage of Auspex’s common stock. Plaintiff alleged that these firms jointly asserted their control to prematurely conclude the sale process to satisfy their own liquidity needs. Plaintiffs also alleged that a majority of directors suffered disabling conflicts of interest. The defendants moved to dismiss. … [Read more...] about Delaware Court of Chancery Addresses the “Cleansing Effect” of Stockholder Approval In Post-Closing M&A Damages Actions
(referred to commonly as “China Fosun Group”) completed the acquisition of Ironshore Inc., a U.S. based insurance and investment company, in November of 2015 (see Fosun International Press Release, Nov. 23, 2016). Shortly thereafter, Fosun was approached by CFIUS over concerns about Ironshore’s subsidiary Write USA that provides insurance coverage to federal employees. (See Reuters, RPT-INSIGHT-U.S. watchdog expands scrutiny to more Chinese deals, October 11, 2016 (noting Fosun was approached in December 2015); Insurance Journal, U.S. Treasury Unit Reviews Fosun’s Acquisition of Ironshore, June 8, 2016.) News reports indicated speculation about access to federal employee data “following the hack last year of employee records held at the Office of Personnel Management,” and that the parties have voluntarily filed a joint notice to the Committee on Foreign Investment in the United States (CFIUS). (Id.; Fosun Press Release, June … [Read more...] about CFIUS Requested Post-Closing Filing: Fosun International Ltd. and Ironshore, Inc.
By the time the six-week trial ended, only AstraZeneca and one of the generic defendants, Ranbaxy, were left. The judge had earlier ruled that the non-cash elements of AstraZeneca's consideration could be considered an illegal payment. On the verdict form, the jury found that AstraZeneca did exercise power in the relevant market; that its settlement of patent litigation included a "large and unjustified payment" to Ranbaxy; and that such settlement was unreasonably anticompetitive. The jury found, however, that that settlement did not prevent Ranbaxy or some other generic producer from entering before May 2014. Instead, that delay was caused by Ranbaxy's inability to produce the generic version prior to that date and the unlikelihood of negotiating an agreement with another generic manufacturer to take its place as the first producer of a generic version of Nexium®. … [Read more...] about Close Victory for Defendants in First Post-Actavis Trial Begins to Answer Reverse Payment Questions