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Sep 11, 2012

M&A Alert: Delaware Supreme Court Upholds Court of Chancery’s Award of $2 Billion in Damages and $300 Million in Attorneys’ Fees in a Controlling Stockholder Transaction that Failed Entire Fairness Review

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In the recent decision Americas Mining Corp. v. Theriault, the Delaware Supreme Court affirmed the Delaware Court of Chancery’s October 2011 decision In re Southern Peru Copper Corporation Shareholder Derivative Litigation; in the lower court decision, the Court of Chancery held that a controlling shareholder and its affiliated directors breached their duties of loyalty because the process by which a transaction with that controlling stockholder was negotiated and approved was not fair and did not result in the payment of a fair price. In upholding the decision, the Supreme Court determined that the Court of Chancery’s entire fairness analysis was comprehensive and that its conclusions, including with respect to the awarded damages and attorneys’ fees, were the product of an orderly and logical process well supported by the record. These decisions emphasize, among other things, the critical importance of a properly formed and effectively functioning special committee in an interested party transaction.

View full M&A Alert, "Delaware Supreme Court Upholds Court of Chancery’s Award of $2 Billion in Damages and $300 Million in Attorneys’ Fees in a Controlling Stockholder Transaction that Failed Entire Fairness Review"