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June 20 — A court-appointed custodian can pursue a plan to sell TransPerfect Global Inc. through a “modified auction” led by the company's existing stockholders, the Delaware Chancery Court ruled June 20 ( In re TransPerfect Glob. Inc., 2016 BL 195972, Del. Ch., No. 9700-CB, 6/20/16 ).
According to the court's decision, the custodian's proposed plan to sell TransPerfect allows its two co-owners—Elizabeth Elting and Philip Shawe—to bid for control of the company alone or in partnership with outside investors. It also permits the custodian to work with outside bidders unaffiliated with the two stockholders, who each effectively control 50 percent of the company's stock.
Shawe opposed the modified auction, claiming that bidders should be limited, at least in the first instance, to Elting and himself.
However, Chancellor Andre Bouchard found that Shawe's plan, which potentially allowed third parties to bid in a second round, would reduce competition in the sale of the company, “contrary to the objective of maximizing stockholder value.”
The court rejected the custodian's recommendation to impose non-competition and non-solicitation obligations on the selling stockholders, saying they weren't appropriate absent evidence that either party engaged in wrongdoing.
In August 2015, Bouchard appointed the custodian to sell the profitable company (34 CARE, 8/21/15) (34 CARE, 8/21/15). In that ruling, Bouchard found the “unusual relief” was warranted because Elting and Shawe had become so deadlocked that they were harming the company.
The court's 2015 ruling sparked some backlash from employees of the translation services company, who are fighting to stop the sale (106 CARE, 6/2/16).
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The opinion is available at http://www.bloomberglaw.com/public/document/In_re_TransPerfect_Glob_Inc_No_9700CB_Civil_Action_No_10449CB_201.
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