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M&A/PE Quarterly, Fall 2022

Alerts and newsletters | September 23, 2022

Lessons from Twitter v. Musk on Access to Directors’ and Executives’ Emails

In a letter opinion issued in connection with discovery matters in Twitter v. Musk (Sept. 13, 2022), the Delaware Court of Chancery ruled that Twitter is not entitled to obtain Elon Musk’s communications on his email accounts at two other (i.e., non-Twitter-af­filiated) companies about the deal and his intention to terminate it. The court held that the emails were protected by the attorney-client privilege and that the companies’ policies allowing company access to personal communications on the company email accounts did not defeat the privilege given that the policies were not applied to Musk.

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Court of Chancery Finds Conflicted Controller Transaction Was “Entirely Fair,” Emphasizing that a “Perfect” Process Is Not Required —BGC Partners

In a post-trial decision in In re BGC Partners Inc. Derivative Litigation (Aug. 19, 2022), the court determined that the merg­er between entities that both were controlled by Howard Lutnick, through his control of Cantor Fitzgerald, L.P. (“Cantor”), met the “entire fairness” standard of review. Vice Chancellor Lori W. Will found that, although the sale process had serious “defects,” it “ultimately was fair”; and that the merger price was well within the range of fairness.

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Court of Chancery Finds Conflicted Controller Spinoff Met MFW Prerequisites for Business Judgment Review—Match Group

In In re Match Group, Inc. Derivative Litigation (Sept. 1, 2022), a stockholder of IAC/InterActiveCorp (“Old IAC”) chal­lenged the multi-step reverse spin-off that was initiated by the company’s controller, a company allegedly indirectly con­trolled by Barry Diller. Vice Chancellor Morgan T. Zurn, at the pleading stage of litigation, found that the transaction met the MFW prerequisites for business judgment review and dismissed the case.

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Court of Chancery Finds MFW Prerequisites Satisfied and Upholds Charter Amendment Prolonging Controlled Company’s Dual-Class Stock Structure—The Trade Desk

In City Pension Fund for Firefighters and Police Officers in the City of Miami v. The Trade Desk, Inc. (July 29, 2022), stock­holders of The Trade Desk (“TTD”) challenged an amendment to the certificate of incorporation of TTD that effectively extended the duration of the company’s dual-class stock structure—which, in turn, effectively extended the duration of the voting control held by TTD’s co-founder/CEO/chairman of the board, who owned 98% of TTD’s high-vote Class B common stock, representing control over 55% of the combined vote of the stockholders. The plaintiff alleged that the controller, TTD’s board of directors, and certain officers breached their fiduciary duties in approving the charter amendment and rec-ommending it to the stockholders (who voted to approve it).

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Chancery Decision Highlights Drafting Imperatives for Fee-Shifting and Break Up Fee Provisions—ETE v. Williams

In the most recent (and perhaps final) ruling in the ETE v. Williams case (Aug. 25, 2022), the Delaware Court of Chancery held that (i) a contingent fee paid to legal counsel by the prevailing party in a litigation may be a “reasonable fee” that can be recouped under a fee-shifting provision in a merger agreement, and (ii) where the parties did not specify whether interest payable on a merger agreement termination fee was to be paid on a simple or compounded basis, it should be paid on a compounded basis.

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Other Decisions and Developments of Interest

Our Other Briefings This Quarter

M&A/PE RoundUp

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