Page 119 - מיזוגים ורכישות - פרופ' אהוד קמר 2022
P. 119
In re Synthes, Inc. Shareholder Litigation
50 A.3d 1022 (Del. Ch. 2012)
Strine, Chancellor:
On this motion to dismiss, plaintiff stockholders argue that they have stated a
claim for breach of fiduciary duty because a controlling stockholder refused to consider
an acquisition offer that would have cashed out all the minority stockholders of the
defendant Synthes, Inc., but required the controlling stockholder to remain as an investor
in Synthes. Instead, the controlling stockholder worked with the other directors of
Synthes and, after affording a consortium of private equity buyers a chance to make an
all-cash, all-shares offer, ultimately accepted a bid made by Johnson & Johnson for 65%
stock and 35% cash, and consummated a merger on those terms (the "Merger"). The
controlling stockholder received the same treatment in the Merger as the other
stockholders….
D. The Plaintiffs’ Revlon And Unocal Arguments Fail As Well
The plaintiffs contend that the business judgment rule does not apply on the separate
ground that the Merger implicates enhanced scrutiny under Revlon, because it is an "end
stage" transaction in which Synthes’ shareholders will only own 7% of the surviving entity.
According to them, this is the last chance for the Synthes minority stockholders to receive
a premium for their Synthes shares and thus on the basis of transcript dictum cited by the
plaintiffs in their brief, the Merger invokes the Revlon standard of review.
As an initial matter, I note that even if Revlon applied, for the reasons discussed at
length above, there are no pled facts from which I could infer that Wyss and the Board
did not choose a reasonable course of action to ensure that Synthes stockholders received
the highest value reasonably attainable. Thus, even if Revlon applied, the complaint fails
to state a viable claim.
But, the plaintiffs are also wrong on the merits of their argument that Revlon applies.
Their sole basis for claiming that Revlon applies is that the Synthes stockholders are
receiving mixed consideration of 65% J & J stock and 35% cash for their Synthes stock,
and that this blended consideration represents the last chance they have to get a
premium for their Synthes shares. But under binding authority of our Supreme Court as
set forth in QVC and its progeny, Revlon duties only apply when a corporation undertakes
a transaction that results in the sale or change of control. Putting aside the reality that
the plaintiffs (under their own theory) were moving from a company under the control of
Wyss to receiving stock in company that had no controlling stockholder, and thus is
already an odd case to apply Revlon, the mixed consideration Merger does not qualify as
115
50 A.3d 1022 (Del. Ch. 2012)
Strine, Chancellor:
On this motion to dismiss, plaintiff stockholders argue that they have stated a
claim for breach of fiduciary duty because a controlling stockholder refused to consider
an acquisition offer that would have cashed out all the minority stockholders of the
defendant Synthes, Inc., but required the controlling stockholder to remain as an investor
in Synthes. Instead, the controlling stockholder worked with the other directors of
Synthes and, after affording a consortium of private equity buyers a chance to make an
all-cash, all-shares offer, ultimately accepted a bid made by Johnson & Johnson for 65%
stock and 35% cash, and consummated a merger on those terms (the "Merger"). The
controlling stockholder received the same treatment in the Merger as the other
stockholders….
D. The Plaintiffs’ Revlon And Unocal Arguments Fail As Well
The plaintiffs contend that the business judgment rule does not apply on the separate
ground that the Merger implicates enhanced scrutiny under Revlon, because it is an "end
stage" transaction in which Synthes’ shareholders will only own 7% of the surviving entity.
According to them, this is the last chance for the Synthes minority stockholders to receive
a premium for their Synthes shares and thus on the basis of transcript dictum cited by the
plaintiffs in their brief, the Merger invokes the Revlon standard of review.
As an initial matter, I note that even if Revlon applied, for the reasons discussed at
length above, there are no pled facts from which I could infer that Wyss and the Board
did not choose a reasonable course of action to ensure that Synthes stockholders received
the highest value reasonably attainable. Thus, even if Revlon applied, the complaint fails
to state a viable claim.
But, the plaintiffs are also wrong on the merits of their argument that Revlon applies.
Their sole basis for claiming that Revlon applies is that the Synthes stockholders are
receiving mixed consideration of 65% J & J stock and 35% cash for their Synthes stock,
and that this blended consideration represents the last chance they have to get a
premium for their Synthes shares. But under binding authority of our Supreme Court as
set forth in QVC and its progeny, Revlon duties only apply when a corporation undertakes
a transaction that results in the sale or change of control. Putting aside the reality that
the plaintiffs (under their own theory) were moving from a company under the control of
Wyss to receiving stock in company that had no controlling stockholder, and thus is
already an odd case to apply Revlon, the mixed consideration Merger does not qualify as
115
