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Tooley v. Donaldson, Lufkin & Jenrette, Inc.

Delaware Supreme Court
845 A.2d 1031 (Del. 2004)


Donaldson, Lufkin & Jenrette, Inc. (DLJ) (defendant) was previously controlled by AXA Financial, Inc. (AXA), which owned 71 percent of DLJ stock. DLJ was later acquired by Credit Suisse Group (Credit Suisse). The consideration for that transaction included both stock and cash. Credit Suisse sought to acquire the rest of the outstanding shares through a tender offer. The tender offer price was $90 per share in cash. The tender offer was set to expire 20 days after its commencement. The merger agreement provided two types of extensions for the closing of the tender offer. Credit Suisse used both. DLJ's minority stockholders (plaintiffs) challenged the second delay, which lasted 22 days. The plaintiffs brought a class action in the court of chancery, alleging that (1) the board of directors breached their fiduciary duties by agreeing to the delay and (2) the delay harmed minority stockholders because of the lost time value of the cash paid for their shares. The court of chancery held that the shareholders' claims were "at most" derivative claims, not direct claims. Further, because the court of chancery concluded that the shareholders lost their standing to bring derivative actions when they tendered their shares, it granted DLJ's motion to dismiss.

Rule of Law


Holding and Reasoning (Veasey, C.J.)

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