Whitebox Concentrated Convertible Arbitrage Partners, L.P. v. Superior Well Services, Inc.
New York Court of Appeals
20 N.Y. 3d 59, 980 N.E. 2d 487 (2012)
- Written by Eric Miller, JD
Facts
Whitebox Concentrated Convertible Arbitrage Partners, L.P., and others (collectively, Whitebox) (plaintiffs) held 54,000 shares of preferred stock in Superior Well Services, Inc. (Superior) (defendant). The relevant corporate document provided that Superior must repurchase (i.e., redeem) the preferred stock in the event of a fundamental change, including another entity’s acquisition of at least half of Superior’s common stock. However, an exception to this provision applied if Superior was the surviving entity in a merger or acquisition transaction. Later, Diamond Acquisition Corp. (Diamond)—a subsidiary of Nabors Industries Ltd. (Nabors)—made a tender offer for a majority of Superior’s common stock. Whitebox became aware of the offer and demanded repurchase, which Superior refused. Diamond ultimately acquired 92 percent of Superior’s common stock, merged with Superior, and ceased to exist. This left Superior as an existing entity with majority control in the hands of Nabors. Whitebox brought an action in state court, seeking a declaration that the merger had triggered the stock-repurchase provision. Superior moved to dismiss the complaint. The court denied the motion. Superior appealed. The appellate division reversed, granting the motion to dismiss the complaint. Whitebox appealed.
Rule of Law
Issue
Holding and Reasoning (Graffeo, J.)
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