Block shareholder did not ‘control’ board in merger talks

By Amy Leisinger, J.D. The Delaware Chancery Court has dismissed a shareholder class action against two real estate companies for breach of fiduciary duty in connection with a merger. According to the court, the complaint failed to adequately allege that the acquiring company (a 33.5 percent shareholder of the acquisition target) exercised control over the target’s board or the special committee considering the merger in a manner to render the board’s merger recommendation invalid. Further, the court found no sufficient evidence that the shareholders’ vote in favor of the merger was uninformed or coerced. Further finding no allegations of corporate waste, the court dismissed the shareholders’ claims with prejudice (In re Rouse Properties, Inc. Fiduciary Litigation, March 9, 2018, Slights, J.). Merger. In 2012, Rouse Properties Inc. conducted a stock purchase rights offering, and a group of companies affiliated with Brookfield Asset Management (together,…

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