Polygon Global Opportunities Master Fund v. West Corporation

Polygon Global Opportunities Master Fund (Polygon) (plaintiff) was a global fund that sought to maximize value through arbitrage transactions. West Corporation (defendant) was a Delaware publicly traded corporation, and Gary and Mary West were its controlling shareholders. West Corporation announced a leveraged recapitalization sponsored by an investor group. The recapitalization would take the form of a squeeze-out merger. Under the merger agreement, West Corporation’s minority stockholders would receive $48.75 per share in cash, which represented a 13 percent premium over the stock price the day before the transaction. The Wests would sell 85 percent of their stock for $42.83 per share in cash and exchange the remaining 15 percent for the stock in the “new” corporation, whose per-share value was also $42.93. The different treatment for the Wests was requested by the special committee and the investor group. Polygon saw a risk arbitrage opportunity and bought West Corporation’s stock immediately after the announcement of the transaction. Polygon made several written demands on West Corporation, seeking production of books and records, all of which were rejected for reasons including failure to state a proper purpose under Del. C. tit. 8, § 220. Polygon sued, claiming it had the proper purposes of valuing its shares in order to decide whether to seek an appraisal and investigating potential breaches of fiduciary duties by the West Corporation’s directors.