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Delaware Court of Chancery Allows Stockholder Litigation to Proceed Against Viacom-CBS Over $30B Merger | Goodwin


IN THIS ISSUE
Delaware Court of Chancery Allows Stockholder Litigation to Proceed Against Viacom-CBS Over $30B Merger; Ninth Circuit Affirms Dismissal with Prejudice of Securities Class Action Against Tesla; Second Circuit Affirms Dismissal of Securities Action Against Spencer Capital as Predominantly Foreign; Delaware Supreme Court Finds That Former Spectra Energy Shareholder Has Standing to Challenge Validity of Merger Price Based on Derivative Action Against Target Entity; Third Circuit Reverses Fraud Convictions Related to Regulatory Loan Reporting Requirements for “Past Due” Loans.

DELAWARE COURT OF CHANCERY ALLOWS STOCKHOLDER LITIGATION TO PROCEED AGAINST VIACOM-CBS OVER $30B MERGER
On January 27, 2021, in In re CBS Corporation Stockholder Class Action and Derivative Litigation, the Delaware Court of Chancery partially denied a motion to dismiss in a class action suit brought by stockholders against ViacomCBS, CBS Board members and executives, Nationa ....

New York , United States , Cavello Bay , Joseph Ianniello , Shari Redstone , Kenneth Shubin Stein , Paul Morris , Viacom Inc , United States District Court , Tesla Inc , Corporation Stockholder Class Action , Primedia Inc , Plaintiff Cavello Bay Reinsurance Ltd , Cavello Bay Reinsurance Ltd , Spectra Energy Partnerslp , Spectra Energy Partners , Enbridge Inc , Federal Reserve , Delaware Court , Spectra Energy Corp , National Amusements Inc , Securities Exchange , Spencer Capital Ltd , Delaware Supreme Court , Chancery Allows Stockholder Litigation , Proceed Against ,

Delaware Supreme Court Adopts Primedia Test for Post-Merger Shareholder Actions | Dechert LLP


Key Takeaways
Under Delaware law, following the acquisition of an entity through a cash-out or stock-for-stock merger, equityholders generally lose standing to pursue derivative claims in the name of the acquired entity unless certain limited exceptions apply.
In 2015, Delaware’s Chancery Court, in Primedia, established a three-part test for determining when former equityholders have standing to pursue post-merger direct claims for a controller’s alleged failure to secure the value of a material derivative claim during the merger negotiations.
Delaware’s Supreme Court has now, through
Spectra Energy, adopted the
Primedia test, but with two important clarifications:
Apart from making a threshold determination about plaintiff’s allegations, a trial court may not apply any further litigation risk discount in assigning value to the plaintiff’s claims on a motion to dismiss. ....

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