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Virginia Bankshares, Inc. v. Sandberg

United States Supreme Court
501 U.S. 1083 (1991)



First American Bankshares, Inc., a bank holding company, began a merger between the First American Bank of Virginia and Virginia Bankshares, Inc. (VBI) (defendant). VBI owned 85 percent of the First American Bank of Virginia’s stock, and minority shareholders owned the remaining 15 percent. First American obtained a valuation of the minority shareholder’s stock from an independent investment banking firm. The firm reported that the stock was worth $42 per share, based on unverified information provided by VBI. VBI’s board then offered to purchase the remaining 15 percent of shares from its minority shareholders for $42 per share, stating that this was a premium for the stock. VBI disclosed this information in a proxy statement to its minority shareholders and recommended approving the merger. The minority shareholders’ votes were not required by law or corporate bylaw. VBI’s minority shareholders, including Sandberg (plaintiff), brought suit alleging that the stock was worth significantly more than $42 per share. The district court ruled in favor of Sandberg and VBI appealed. The Court of Appeals affirmed in part, vacated in part, and remanded. VBI petitioned for certiorari to the United States Supreme Court.

Rule of Law


Holding and Reasoning (Souter, J.)

Concurrence/Dissent (Kennedy, J.)

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