Archive: August 30, 2017

CHANCERY COURT DENIES MOTION TO DISMISS AND ALLOWS DERIVATIVE SUIT AGAINST BOARD MEMBERS TO CONTINUE

By: Whitney J. Smith and Michael Bill

In H&N Management Group, Inc. & Aff Cos Frozen Money Purchase Plan v. Robert M. Couch et al., No. 12847-VCMR (Del. Ch. Ct. August 1, 2017), the Court of Chancery denied defendants’ motion to dismiss and held that plaintiffs sufficiently alleged a reason to doubt that the board of AGNC Investment Corp (the “Company”) was adequately informed when approving (i) subsequent renewals of a management agreement between the Company and American Capital Mortgage Management, LLC (the “Manager”) as well as (ii) the acquisition of the Manager for a price of $562 million.

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IN STATUTORY MERGER APPRAISAL PROCEEDING, CHANCERY COURT DECLINES USE OF THE DISCOUNTED CASH FLOW ANALYSIS TO DETERMINE FAIR VALUE AND UPHOLDS DEAL PRICE AS BEST INDICATOR OF FAIR VALUE

By Annette Becker and Rikiya Thomas

In In Re Appraisal of PetSmart, Inc., C.A. No. 10782-VCS (Del. Ch. May 26, 2017), the Delaware Court of Chancery confirmed in a statutory appraisal proceeding that the fair value of the shares of common stock of PetSmart, Inc. (“PetSmart” or the “Respondent”) at the time of its going-private merger transaction was the deal price of $83 per share.  The Court reached this conclusion after thoroughly examining and ultimately rejecting the use of the discounted cash flow (“DCF”) analysis to determine fair value as proposed by a group of plaintiff former stockholders of PetSmart (the “Petitioners”).

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