Quimbee logo
DMCA.com Protection Status

In re Toys “R” Us, Inc., Shareholder Litigation

877 A.2d 975 (2005)

Case BriefRelatedOptions
From our private database of 35,800+ case briefs...

In re Toys “R” Us, Inc., Shareholder Litigation

Delaware Court of Chancery

877 A.2d 975 (2005)

Facts

Toys “R” Us, Inc. (defendant) (Toys) was a retail corporation that operated three divisions: toys, products for babies and expectant mothers, and a Japanese toy-store chain. Toys’ board of directors comprised nine independent members and one inside member, the chief executive officer, John H. Eyler, Jr. In January 2002, Toys traded for $12.00 a share. The board of directors conducted a publicly announced search for strategic alternatives for Toys with the advice of expert advisors, and the board settled on the sale of the toys division. The board of directors sought bids from buyers, and four competing bids emerged. The board of directors placed the bidders in two final rounds of bids, and one of the bidders emerged with an interest to buy the whole company, not just the toy division. The board of directors decided to stick to selling only the toys division. The bidder increased its bid for the whole company, and the bid was more than originally projected by the expert advisors. Toys’ executive committee, recognizing the need to act quickly to preserve bids, approved soliciting bids for the entire company. The winning bid was a merger proposal of $26.75 per share from Kohlberg Kravis Roberts & Co. (KKR), which was $1.50 more per share or $350 million more in total than the next bidder. Based on the board’s information regarding the value of Toys, it decided the KKR merger bid was the best way to maximize stockholder value. Iron Workers of Western Pennsylvania Pension and Profit Plans and Jolly Roger Fund L.P. (collectively, the shareholders) (plaintiffs) filed a preliminary injunction to enjoin a Toys stockholders’ vote on approving the KKR merger. The shareholders alleged that the board of directors failed in its duty to act reasonably in pursuit of attaining the highest value for the Toys stockholders. The shareholders also alleged the brief auction was unreasonable and that the board of directors should have conducted a full-blown search for buyers. The shareholders alleged that the board of directors unreasonably locked up the $26.75 price, agreeing to a draconian deal that precluded any topping bid.

Rule of Law

Issue

Holding and Reasoning (Strine, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 620,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 620,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 35,800 briefs, keyed to 984 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 620,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 35,800 briefs - keyed to 984 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership