Gabelli & Co. Profit Sharing Plan v. Liggett Group, Inc.
Delaware Supreme Court
479 A.2d 276 (1984)
- Written by Eric Miller, JD
Facts
Grand Metropolitan Limited (Grand Met) (defendant) formed a wholly owned subsidiary, GM Sub Corporation (defendant), to acquire Liggett Group, Inc. (Liggett) (defendant). GM Sub made a tender offer to acquire all shares of Liggett’s common stock for $69 per share—a price significantly higher than the range in which the stock had been trading. Liggett’s board of directors approved the offer and recommended that the shareholders accept it. GM Sub then acquired 87.4 percent of Liggett’s common stock. For unexplained reasons, minority shareholder Gabelli & Co., Inc., Profit Sharing Plan (Gabelli) (plaintiff) refused to tender its 800 shares. The merger became effective on August 6, 1980, and the remaining minority shareholders were cashed out at the same $69 per-share price that they would have received had they tendered their shares in the initial offer. As a result of the merger, Liggett’s third-quarter dividend, which normally had a record date of mid-August, was not declared or paid. Gabelli brought suit in the Delaware Chancery Court to compel payment of the dividend, asserting that the majority shareholders had breached a fiduciary duty to the minority shareholders. The court granted summary judgment in favor of Grand Met, GM Sub, and Liggett. Gabelli appealed The Delaware Supreme Court granted certiorari.
Rule of Law
Issue
Holding and Reasoning (Herrmann, C.J.)
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