Appraisal Suit Over $2.8B Rouse Merger Gets Lead Counsel

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By Michael Greene

Dec. 12 — Grant & Eisenhofer PA was appointed lead counsel in an appraisal action to determine the fair value of Rouse Properties Inc. shares after the company’s $2.8 billion acquisition by Brookfield Asset Management Inc. ( In re Appraisal of Rouse Props. Inc. , 2016 BL 411262, Del. Ch., No. 12609-VCS, 12/8/16 ).

Vice Chancellor Joseph R. Slights III Dec. 8 found that the Delaware Chancery Court could appoint a lead counsel in the proceeding over the objections of some of the petitioning shareholders.

The court said the case was “uncommon” given that the two groups of shareholders that filed appraisal petitions after the merger couldn’t agree on a unified approach for their claims.

“When the various petitioners do not agree, there may well be cases where the Court determines it is best to allow each petitioner to chart its own course without consolidation or coordination,” Slights said. “This is not such a case.”

Rouse, a New York-based real estate investment trust whose portfolio includes 35 malls and retail centers in 21 states, announced in February that it would be acquired by a Brookfield Asset Management affiliate for $18.25 per share in an all-cash transaction. The deal closed in July.

Participate Fully

Shareholders represented by law firm Ashby & Geddes PA had opposed a request to appoint lead counsel. They argued that doing so would infringe upon their statutory right to participate fully in the proceeding.

However, Slights disagreed with this interpretation of Delaware’s appraisal statute. It is not reasonable to interpret the statute “as guaranteeing a dissenting stockholder who has filed a petition the right to separately prosecute the petition in consolidated appraisal litigation with the counsel of its choosing,” he said.

The court also found that appointing Grant & Eisenhofer was appropriate, giving “great weight” to the fact that the firm represents shareholders with a larger economic stake. It said the shareholders collectively owned about 75 percent of the shares entitled to an appraisal.

To contact the reporter on this story: Michael Greene in Washington at mGreene@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

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