City of North Miami Beach General Employees' Retirement Plan v. Dr Pepper Snapple Group, Inc.

189 A.3d 188 (2018)

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City of North Miami Beach General Employees’ Retirement Plan v. Dr Pepper Snapple Group, Inc.

Delaware Court of Chancery
189 A.3d 188 (2018)

Facts

In 2018, Dr Pepper Snapple Group, Inc. (Dr Pepper) (defendant) and Keurig Green Mountain, Inc. (Keurig) announced a merger. The merger transaction was structured to make Keurig an indirect wholly-owned Dr Pepper subsidiary. To effectuate the transaction, Dr Pepper planned to form a wholly-owned subsidiary, Salt Merger Sub, Inc. (Merger Sub) (defendant), that would merge with and into Maple Parent Holdings Corp. (Maple Parent) (defendant), the indirect owner of Keurig. Once the transactions were completed, Maple Parent’s equity holders would own 87 percent of Dr Pepper’s stock, and Dr Pepper’s existing stockholders would own 13 percent. Dr Pepper’s stockholders would also receive a special cash dividend entitling them to $103.75 per share. Dr Pepper’s stockholders were asked to approve two proposals necessary for the merger transaction: (1) a proposal to issue Dr Pepper common stock as merger consideration, and (2) a proposal to amend Dr Pepper’s certificate of incorporation to provide for an increase in authorized shares to issue the number of shares required for the merger. In Dr Pepper’s preliminary proxy statement for the stockholders’ meeting at which the stockholders would vote on the proposals, Dr Pepper indicated that stockholders would not have statutory rights to the appraisal of their shares (i.e., appraisal rights) under Delaware General Corporation Law § 262 with respect to the proposed merger. Two Dr Pepper stockholders, City of North Miami Beach General Employees’ Retirement Plan and Maitland Police Officers and Firefighters Retirement Trust (collectively, the stockholders) (plaintiffs), sued Dr Pepper in the Delaware Court of Chancery, asserting that they should be afforded appraisal rights. The parties cross-moved for summary judgment.

Rule of Law

Issue

Holding and Reasoning (Bouchard, J.)

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