In re Del Monte Foods Co. Shareholder Litigation

25 A.3d 813 (2011)

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In re Del Monte Foods Co. Shareholder Litigation

Delaware Court of Chancery
25 A.3d 813 (2011)

  • Written by Heather Whittemore, JD

Facts

Del Monte Foods Company (Del Monte) hired the investment bank Barclays Capital (Barclays) as its financial advisor. Barclays convinced Del Monte to put itself up for sale and began secretly soliciting offers for Del Monte from private-equity firms. In 2010 Barclays convinced Kohlberg, Kravis, Roberts, & Co. (KKR) and Vestar Capital Partners (Vestar), two equity firms that had been competing for Del Monte, to place a bid together. Barclays also offered to provide financing to KKR and Vestar, creating a conflict of interest. Though Del Monte’s board of directors (the board) (defendant) eventually learned about Barclays’s actions and hired a second financial advisor, Del Monte continued to work with Barclays. In November 2010, Del Monte agreed to a merger with a company owned by KKR and Vestar. If the merger was approved by Del Monte’s shareholders, they would receive $19 per share. A group of Del Monte shareholders (the plaintiff shareholders) (plaintiffs) sought a preliminary injunction against the merger, arguing that the board had breached its fiduciary duty by failing to pursue the best acquisition reasonably available. The plaintiff shareholders reasoned that the board was manipulated by Barclays and, therefore, that the proposed merger was not the best acquisition reasonably available.

Rule of Law

Issue

Holding and Reasoning (Laster, J.)

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