Shareholder Loses Suit Challenging $6.5B Solera-Vista Deal

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By Michael Greene

A pension fund can’t proceed with a lawsuit challenging Vista Equity Partners’ acquisition of Solera Holdings Inc., the Delaware Chancery Court ruled Jan. 5 ( In re Solera Holdings Inc. Stockholder Litig. , 2017 BL 2233, Del. Ch., No. 11524-CB, 1/5/17 ).

Chancellor Andre G. Bouchard dismissed the lawsuit after concluding that Solera stockholders were fully informed in approving the transaction.

The decision is the latest to apply the Delaware Supreme Court’s decision in Corwin v. KKR Financial Holdings LLC, 2015 BL 323544 (October 2015). Under Corwin, the chancery court has limited review of certain transactions that are ratified by informed and “uncoerced” stockholders. The ruling has been applied in several chancery court decisions to dismiss shareholder challenges of mergers and acquisitions.

Private equity firm Vista acquired the Westlake, Texas-based risk management software provider for $6.5 billion, including net debt, in March 2016.

The City of Warren Police and Fire Retirement System alleged that Solera directors breached their legal duties in approving the deal because the transaction favored the interests of Solera founder Tony Aquila and corporate management.

Area of Confusion

The ruling answered an open question regarding the stockholder ratification defense—how does the burden of proof operate in determining whether the vote was fully informed?

Bouchard said a stockholder challenging a transaction’s approval must identify a deficiency in a disclosure document, before the burden falls on the defendants to rebut the allegations.

“Some have expressed concern about the fairness of requiring plaintiffs to plead disclosure deficiencies before obtaining discovery,” Bouchard said. “The reality, however, is that plaintiffs must plead claims before receiving discovery in American civil litigation all the time.”

To contact the reporter on this story: Michael Greene in Washington at

To contact the editor responsible for this story: Yin Wilczek at

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