DealLawyers.com Blog

Here’s news from Steven Haas of Hunton & Williams:

On Friday, the Delaware Court of Chancery approved a $2.4 million fee award arising out of the M&A litigation in In re Compellent Technologies Shareholder Litigation. The fee award was based on a settlement agreement in which the merger agreement was amended to “relax” numerous deal protections, including the no-shop provisions, information rights, and termination fee. The settlement also required the target to delay its stockholder meeting and rescind a rights plan that had been adopted specifically in connection with the announcement of the merger.

The court concluded that, by “shift[ing] the agreement’s protective array from the aggressive end of the spectrum towards the middle,” the settlement had conferred a “benefit” by increasing the likelihood of a topping bid, even though none materialized. The court also made clear that it was not reviewing the deal protections under enhanced scrutiny or analyzing whether the target’s board of directors might have breached its fiduciary duties in approving the deal protections. Rather, those issues had been mooted by the settlement and the court’s only job was to award attorneys’ fees based on the “benefit” conferred.