Bloomberg BNA’s Corporate Law & Accountability Report is available on the Corporate Law Resource Center. This news service keeps corporate practitioners informed of legal developments of...
Dec. 1 — Novell Inc.'s board did not act in bad faith in completing a merger and patent sale by unlawfully treating bidders differently, the Delaware Chancery Court held Nov. 25 in a would-be shareholder class action.
Granting the board's summary judgment bid, Vice Chancellor John W. Noble held that the former shareholder plaintiffs failed to supply a “factual basis for concluding that the Board acted with improper motives.”
The court recounted that in November 2010, the Novell board approved a deal under which Novell would be acquired by a wholly owned subsidiary of Attachmate Corp., a software concern. Novell also agreed to sell patents, pending patent applications and lapsed patent applications to a consortium of technology concerns. In February 2011, Novell's shareholders approved the acquisition, which was consummated in April 2011.
In their complaints, the plaintiffs alleged that the Novell board breached its fiduciary duties by favoring Attachmate over competing bidders. In January 2013, the court allowed the plaintiffs' “bad faith claim” to survive a dismissal bid (11 CARE 34, 1/11/13). Subsequently, the defendants moved for a summary judgment, arguing that the plaintiffs have failed to perfect facts showing that the board acted with “any improper motive.”
The court explained that the main issue is whether the board acted on some motive other than “advancing the corporation's best interests.” Applying the applicable “enhanced scrutiny” standard, the court found that “nothing” about the board's actions in consummating the deal was “unreasonable.”
“Delaware law does not require a board to treat all bidders equally, and Defendants have presented unrebutted evidence demonstrating that their actions during the sales process were at least within the realm of reasonableness,” it said.
Plaintiffs were represented by Grant & Eisenhofer P.A., Wilmington, Del.; Faruqi & Faruqi LLP, Wilmington, Del.; and Bernstein Litowitz Berger & Grossman LLP, New York.
Defendants were represented by Skadden, Arps, Slate, Meagher & Flom LLP, Wilmington, Del. and Boston.
The opinion is available at http://www.bloomberglaw.com/public/document/CONF_ORD_ON_DISCCONS_W6012_6019_6020_6021_6024_6030_6037_6039_604.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)