Topic: Deal Protection

Termination Fee is Not Exclusive Remedy for Breach of No-Shop

By Sara Kirkpatrick and Lisa Stark

On September 9, 2019, the Delaware Court of Chancery held that Genuine Parts Company (“GPC”) adequately pled facts that supported a pleading stage inference that Essendant Inc. breached its merger agreement with GPC by terminating the agreement to pursue a transaction with non-party Sycamore Partners (“Sycamore”) pursuant to a superior proposal termination right. The Court further found that GPC adequately pled that its acceptance of a termination fee from Essendant did not preclude GPC from pursuing breach of contract claims against Essendant for its alleged breaches of the parties’ merger agreement.

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Chancery Court Holds Corwin Prevents Claims Where Deal Protection Measures Are Reasonable

By: Joanna Diakos and Douglas A. Logan

In In re Paramount Gold and Silver Corp. Stockholders Litigation, Consol. C.A. No. 10499-CB (Del. Ch. Apr. 13, 2017), the Delaware Chancery Court dismissed a stockholder derivative suit asserting a claim for breach of fiduciary duty against the directors (“Defendants”) of Paramount Gold and Silver Corporation (“Paramount” or the “Company”) in connection with Paramount’s merger with Coeur Mining, Inc. (“Coeur”). The Court dismissed the claim finding that a side royalty agreement entered into by Paramount and Coeur did not constitute a deal protection device and because the Court found that Plaintiffs had failed to identify any material deficiencies in Paramount’s registration statement.

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In re TriQuint Semiconductor, Inc. Stockholders Litigation, C.A. No. 9415-VCN (Del. Ch. June 13, 2014)

By William Axtman and Joshua Haft

In In re TriQuint Semiconductor, Inc. Stockholders Litigation, plaintiff stockholders of TriQuint Semiconductor, Inc. (“TriQuint”) moved to expedite their breach of fiduciary duties claims against TriQuint’s board of directors for approving a merger of equals with RF Micro Devices, Inc. (“RFMD”) in which the shares of each company would be exchanged for 50% of the shares of a newly formed entity, Rocky Holding, Inc. (“Rocky Holding”). In this letter opinion, the Delaware Court of Chancery ruled on plaintiffs’ motion for expedited proceedings with regard to plaintiffs’ claims that the TriQuint board (i) engaged in defensive entrenchment tactics, (ii) agreed to preclusive deal protection devices, and (iii) failed to provide all material information to the stockholders in advance of the stockholder vote.

In order to show good cause for expedited proceedings under Delaware law, plaintiffs must articulate “a sufficiently colorable claim” and show “a sufficient possibility” of irreparable injury so as to justify imposing the costs of an expedited preliminary injunction proceeding on the defendants and the public.

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