Delaware Court Denies Dismissal of Claims Based on Controller and Financial Advisor Conflicts
On May 31, 2024, the Delaware Court of Chancery issued an important decision addressing several key areas of Delaware law related to merger litigation. The opinion indicates that the court will continue to closely scrutinize potential conflicts of interest in M&A transactions involving controlling stockholders and financial advisors, particularly as to disclosures concerning their fees […]
Edward B. Micheletti, Joseph O. Larkin, and Arthur R. Bookout are Partners at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on a Skadden memorandum by Mr. Micheletti, Mr. Larkin, Mr. Bookout, and Gregory P. Ranzini and is part of the Delaware law series; links to other posts in the series are available here.
On May 31, 2024, the Delaware Court of Chancery issued an important decision addressing several key areas of Delaware law related to merger litigation. The opinion indicates that the court will continue to closely scrutinize potential conflicts of interest in M&A transactions involving controlling stockholders and financial advisors, particularly as to disclosures concerning their fees and relationships.
Background
In Firefighters’ Pension System of the City of Kansas City, Missouri Trust v. Foundation Building Materials, Inc., Vice Chancellor Travis Laster granted in part and denied in part six separate motions to dismiss arising from the sale of Foundation Building Materials (the Company) to a subsidiary of American Securities LLC (American).
