Americas Mining Corp. v. Theriault
51 A.3d 1213
| Del. | 2012Background
- Derivation suit challenged Southern Peru Copper Corp.'s Merger with Minera México, S.A. de C.V. (Grupo México via AMC) as unfair to Southern Peru's minority stockholders.
- Southern Peru paid $3.7 billion for Minera (via 67.2 million newly issued shares) while Minera's value was found to be about $2.4 billion, triggering breach of fiduciary loyalty.
- Court of Chancery ordered damages equal to the value gap plus interest, totaling about $2.0316 billion, and awarded Southern Peru's plaintiffs $304 million in attorneys’ fees.
- Special Committee, guided by Goldman Sachs and A&S, engaged in a shift from stand-alone to relative valuation, ultimately endorsing a higher price to Grupo México.
- Negotiations culminated in a fixed exchange ratio of 67 million shares, with governance protections and accompanying terms (collars and minority vote considerations), but the court found the process unfair.
- Post-trial, the court upheld the damages and a 15% common-fund attorneys’ fee (over $304 million), with an appellate concurrence dissenting on the fee analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Burden shifting and independence of the Special Committee | Plaintiff contends a proper burden shift was not established; Special Committee's independence was compromised by Grupo México's control. | Defendants argue burden shift applied if Special Committee was independent and functioned at arm's length. | Court declined pretrial burden shift; burden remained with defendants; affirmed end result under entire fairness. |
| Fair dealing and fair price under entire fairness | Special Committee and Goldman manipulated inputs to justify overpayment; process was tainted by control. | Relative valuation and other methodologies were legitimate and used to determine fair price. | Process deemed unfair and price unfair; entire fairness not achieved; damages upheld. |
| Damages remedy and calculation | Damages should reflect the difference between give and get, plus interest; the court’s method should be respected. | Argues for smaller or rescissory remedy; discounting counteroffers and methodologies. | Damages calculated as approximately $1.347 billion plus interest, using balanced valuations; method upheld. |
| Attorneys’ fee award reasonableness | Sugarland factors support a substantial fee given the enormous benefit created and complexity. | Fee too high; challenge to use megafund and hour-based metrics; question on look-through approach. | Fee award of 15% of the common fund affirmed; Sugarland factors applied with discretion, rejecting per se megafund constraints. |
Key Cases Cited
- Sugarland Indus., Inc. v. Thomas, 420 A.2d 142 (Del. 1980) (establishes Sugarland factors for common fund attorney's fees, emphasizing benefit achieved)
- Emerald Partners v. Berlin, 787 A.2d 85 (Del. 2001) (burden shifting requires a truly independent special committee with real bargaining power)
- Kahn v. Tremont Corp., 694 A.2d 422 (Del.1997) (burden-shifting standard tied to how the special committee negotiated at arm's length)
- In re Cox Commc’ns, Inc. S'holders Litig., 879 A.2d 604 (Del.Ch. 2005) (discusses burden-shifting and independent committee requirements in fiduciary reviews)
- Wilderman v. Wilderman, 328 A.2d 456 (Del.Ch. 1974) (look-through approach and derivative recovery guidance for corporate actions)