In Re Rex Holdings Co., Inc.

Rex Holdings Co., Inc. (Rex Holdings) (defendant) operated as a holding company with multiple businesses, such as restaurants, convenience stores, and supermarkets. Rex Holdings incurred a substantial loss, leading the company to restate its projections and the market price of Rex Holdings to drop more than 50 percent before making a minor recovery. An interested investment fund created a special-purpose company, AP8, Inc., to acquire Rex Holdings. AP8 made an offer for Rex Holdings based on a 14 percent increase in Rex Holdings’ average market price in the preceding month. The Rex Holdings board of directors approved the proposal and presented it to the shareholders as a management buyout, with the chief executive officer expected to acquire a third of AP8’s stock and continue as the company manager. Rex Holdings also announced that it would freezeout any shareholders who did not tender their shares in exchange for new stock. AP8’s tender successfully acquired over 90 percent of Rex Holdings. Rex Holdings held a shareholders’ meeting at which it obtained approval for a stock-restructuring plan. Some of the shareholders objected (the dissenting shareholders) (plaintiffs), complaining that the price was unfair and complete disclosures about the management buyout process and the business plan going forward had not been presented. The dissenting shareholders sought an appraisal of the stock value. While the appraisal process was ongoing, Rex Holdings merged into AP8, and AP8 then changed its name to Rex Holdings, Inc., the original Rex Holdings name. The Tokyo District Court determined that the tendered stock price was a fair appraisal price, and the dissenting shareholders appealed. The Tokyo High Court held that the tender price was insufficient and set a price substantially higher. Rex Holdings appealed to the Japan Supreme Court.