Chancery Court Dismisses With Prejudice Shareholder Attack on ‘Arm's Length' Merger

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June 30 — Deeming many of the plaintiff's arguments “conclusory,” the Delaware Court of Chancery June 30 granted a semiconductor company's motion to dismiss litigation commenced by a shareholder attacking a merger that was conducted “at arm's length” .

Paul Dent, a shareholder of Ramtron International Corp., filed suit against the company and its directors for breaches of fiduciary duty and an appraisal of his shares, and he claimed that Cypress Semiconductor Corp. aided and abetted those breaches. Dent claimed that Ramtron's board failed to maximize shareholder value in accepting a 2012 merger offer from Cypress.

During a period of 19 months, Cypress made a number of increasing offers to buy Ramtron, and Ramtron engaged 24 other possible suitors before accepting an offer from Cypress. Cypress's ultimate offer of $3.10 per share represented a 71 percent premium over the closing price of Ramtron's stock on June 11, 2012, the last trading day before the public announcement of the deal.

Dent failed to provide evidence that could call into question “the independence or disinterestedness” of a majority of the Ramtron board, according to Vice Chancellor Donald F. Parsons. Dent also failed to show that board members approved the transaction in bad faith, Parsons ruled.

In particular, Dent made no effort to explain how purported deal-protection devices contained in the merger agreement were “draconian” and “preclusive,” the opinion states. In fact, Parsons concluded, the devices do not appear to deviate in any meaningful way from similar provisions that have been approved by the court.

On his claims that Ramtron directors breached their duty of candor, Dent failed to explain how the information he sought would have been anything more than “helpful” or how it “would significantly alter the total mix of information available” to stockholders, the opinion states.

The court dismissed Dent's claims with prejudice.

Faruqi & Faruqi LLP of Wilmington, Del., represented Dent, while Richards, Layton & Finger PA, also of Wilmington, represented Ramtron and its former directors.

Attorneys from Abrams & Bayliss LLP of Wilmington and Wilson, Sonsini, Goodrich & Rosati of Palo Alto, Calif., represented Cypress.

The opinion is available at http://www.bloomberglaw.com/public/document/Dent_v_Ramtron_Intl_Corp_CA_No_7950VCP_2014_BL_181986_Del_Ch_June.