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A C&J Energy Services Inc. shareholder failed to persuade the Delaware Supreme Court to revive claims that directors disclosed misleading information about the company’s $2.86 billion merger with a unit of Nabors Industries Ltd. ( City of Miami Gen. Emps.’ & Sanitation Emps.’ Ret. Tr. v. Comstock , 2017 BL 91878, Del., No. 482, 2016, 3/23/17 ).
The shareholder didn’t plead enough facts to show that the company’s proxy statement was materially misleading, the state high court said in a March 23 order upholding the lower court’s dismissal.
This is the second time that the Delaware Supreme Court has considered the lawsuit. The plaintiff, the City of Miami General Employees’ and Sanitation Employees’ Retirement Trust, sought unspecified damages. It has until March 28 to file a request for reargument in the case.
The Delaware Chancery Court dismissed the case in August 2016. On appeal, the shareholder argued that C&J directors were required to fully disclose the terms of a competing bid and the background of the solicitation process before the shareholders voted on the Nabors deal.
The state Supreme Court found the shareholder hadn’t shown that the competing bid “was financially superior, much less that the bidder was willing to raise its bid to a level that was in fact superior to the Nabors deal.” The court also found that the omitted disclosures weren’t material in light of the company’s broad outreach to other plausible bidders.
Counsel for the shareholder, Grant & Eisenhofer PA, and a C&J Energy representative didn’t immediately respond to requests for comment.
C&J completed its merger with Nabors in March 2015 after the state Supreme Court reversed a chancery court order that would have temporarily prevented the merger.
Several months after the deal closed, the plaintiff amended its complaint to include allegations of misleading or incomplete disclosures. The chancery court dismissed the new claims, finding that the deal was approved by fully informed and uncoerced stockholders.
To contact the reporter on this story: Michael Greene in Washington at mGreene@bna.com
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The decision is available at http://www.bloomberglaw.com/public/document/City_of_Miami_Gen_Emps__Sanitation_Emps_Ret_Tr_v_Comstock_No_482_
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