In re Solera Holdings, Inc. S’holder Litig., C.A. No. 11524-CB (Del. Ch. Jan. 5, 2017) (Bouchard, C.)
In this memorandum opinion, Chancellor Bouchard granted a motion to dismiss a stockholder complaint challenging the acquisition of Solera Holdings, Inc. (“Solera”). The transaction was negotiated by a special committee and followed a sales process that involved the solicitation of numerous financial firms and strategic companies and involved a go-shop that permitted Solera to continue discussions with another potential purchaser. The complaint asserted a claim for breach of fiduciary duty against the eight members of Solera’s board, seven of whom were independent. Plaintiff argued that the directors breached their fiduciary duties under Revlon and its progeny in approving the transaction and raised a number of disclosure claims. The defendants moved to dismiss the complaint for failure to state a claim for relief.
The Court granted defendants’ motion to dismiss finding the transaction subject to business judgment review because a disinterested majority of Solera’s stockholders approved the merger in a fully-informed and uncoerced vote. The Court reiterated that Revlon is not a tool designed with post-closing money damages in mind, and that under Corwin, the transaction was subject to business judgment review. In reaching its decision, the Court addressed the burden of proof under Corwin. The Court explained that a plaintiff challenging a decision to approve a transaction must first identify a deficiency in the operative disclosure document, at which point the burden would fall on defendants to establish the alleged deficiency fails as a matter of law in order to secure the cleansing effect of the vote. Because the Court found that none of plaintiff’s disclosure claims had merit, it dismissed the complaint under Corwin.