August 19, 2013

In re Trados: Delaware Decision on Entire Fairness Standard

John Grossbauer of Potter Anderson notes: Last week, Delaware Vice Chancellor Laster delivered this post-trial opinion in In re Trados Incorporated Shareholders Litigation. In his 114-page opinion, the Vice Chancellor finds that the entire fairness standard applied to the sale of Trados to SDL plc, in which the common stockholders received no consideration, meaning the defendants bore the burden of proving the fairness of the sale. The Vice Chancellor held that, “despite the directors’ failure to follow a fair process and their creation of a trial record replete with contradictions and less-than-credible testimony, the defendants carried their burden of proof on this issue” because the common stock had “no economic value before the merger.” Accordingly, the Vice Chancellor also held that the appraised value of the common stock was zero. The Vice Chancellor did grant the plaintiffs leave to file a petition asking for payment of their legal fees.