30 A.3d 54
Del. Ch.2011Background
- Wesco Financial Corporation merged with Montana Acquisitions, LLC (a Berkshire subsidiary) with Berkshire owning 80.1% of Wesco prior to the merger.
- Minority Wesco stockholders could elect cash, Berkshire Class B stock, or a mix; non-electors received cash by default.
- The election form deadline preceded the special meeting; the proxy and election forms were separate documents.
- Proxy statement stated Wesco holders would not have appraisal rights; the merger was effected under 8 Del. C. § 264.
- Number of shares electing cash, Berkshire stock, and non-electors were disclosed; no stockholder demanded appraisal.
- The court held, on cross-motions for partial summary judgment, that Wesco stockholders were not entitled to appraisal rights.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appraisal rights apply to the Wesco-Berkshire merger | Krieger contends appraisal rights exist for forced cash. | Wesco/Berkshire argue market-out and §262(b)(2) remove rights. | No appraisal rights; market-out not triggered. |
| Whether §262(b)(2) restores appraisal rights due to the form of consideration | Krieger argues exception to market-out applies because cash could be received. | No, holders were not required to take non-stock consideration. | §262(b)(2) did not restore rights. |
| Whether the stockholder-by-stockholder view controls appraisal rights | Krieger emphasizes individual electors should trigger rights. | Statute is class-wide; availability is transactional. | Appraisal rights are class-wide, not stockholder-by-stockholder. |
| Whether alleged misleading disclosures about appraisal rights affected rights | Krieger claims proxy misled about rights. | Disclosure was immaterial since rights were not available. | Disclosures were accurate and complete; no quasi-appraisal remedy. |
Key Cases Cited
- Gilbert v. El Paso Co., 575 A.2d 1131 (Del. 1990) (framework for appraisal rights analysis; contextual precedent)
- La. Mun. Police Employees' Ret. Sys. v. Crawford, 918 A.2d 1172 (Del. Ch. 2007) (addresses threshold for appraisal rights in market-out context)
- Berger v. Pubco Corp., 976 A.2d 132 (Del. 2009) (quasi-appraisal remedy for disclosure violations in certain mergers)
- Gen. DataComm Indus., Inc. v. State of Wis. Inv. Bd., 731 A.2d 818 (Del.Ch. 1999) (settled approach to unsettled law on disclosure of appraisal rights)