Del. M&A Ruling Shows High Bar For Determining Controllers

Law360 (February 7, 2020, 4:04 PM EST) -- In In re Essendant Inc. Stockholder Litigation, the plaintiff stockholders of Essendant Inc. brought claims against the company’s directors for their decision to terminate an agreement for a stock-for-stock merger with Genuine Parts Co. in order to enter into an all-cash deal offered by Staples Inc. and its private equity firm parent, Sycamore Partners.

On Dec. 30, 2019, the Delaware Court of Chancery at the pleading stage of the litigation rejected the plaintiffs’ contention that Sycamore, although a minority stockholder, was a controlling stockholder of the company.

In so ruling, Vice Chancellor Joseph R. Slights dismissed the plaintiffs’ claims that (1) Sycamore...

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