Archive: December 12, 2014

Valuation Materials Prepared Pre-litigation by Appraisal Petitioners Are Discoverable

By Eric Freedman and Sophia Lee Shin

FACTS

On June 11, 2013, Dole Food Company, Inc. (“Dole”) announced that its board had received an unsolicited proposal from David Murdock, Dole’s CEO, Chairman, and controlling stockholder, to purchase all of the outstanding shares of Dole’s common stock for $12 per share. Approximately two months later, Dole and Murdock announced an agreement to take Dole private in a merger at $13.50 per share (the “Merger”). On October 31, 2013, Dole held a special meeting of the stockholders at which the stockholders approved the Merger, and the transaction closed on November 1, 2013.

Hudson Bay Master Fund Ltd. and Hudson Bay Merger Arbitrage Opportunities Master Fund Ltd. (together, “Hudson Bay”) and Ripe Holdings LLC (“Ripe”), as holders of Dole common stock, subsequently sought an appraisal for their shares. Ripe is a special-purpose investment vehicle managed by the affiliates of Fortress Investment Group (“Fortress”).

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Supreme Court Partially Reverses Chancery Decision Interpreting Common Voting Agreement Provisions

By Holly Vance and Porter Sesnon

In Salamone, Dura, and Halder v. Gorman, IV, the Supreme Court of Delaware (the “Court”) partially affirmed and partially reversed a Chancery Court decision determining the composition of the board of directors (the “Board”) of Westech Capital Corporation (“Westech”).  The dispute centered on the interpretation of a Voting Agreement entered into by Westech and the purchasers of Westech’s Series A Preferred Stock in 2011.

The Voting Agreement provisions at issue were Sections 1.2(b) and 1.2(c), each of which set forth the process for designating certain individuals to serve on the Board.  Section 1.2(b) provides for one director to be designated “by the majority of the holders of the Series A Preferred Stock . . . .”  Section 1.2(c) provides two individuals to be designated “by the Key Holders . . . .”  The dispute revolved around the removal by John J. Gorman, IV (“Gorman”), Westech’s majority stockholder, of a current director nominated pursuant to Section 1.2(c) and the election of two new directors, one pursuant to Section 1.2(b) and another pursuant to Section 1.2(c).

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