Defense counsel retained Cornerstone Research to conduct valuation analyses in this merger and acquisition transaction dispute.
Retained by Milbank, Tweed, Hadley & McCloy; by Morris, Nichols, Arsht & Tunnell; by Richards, Layton & Finger; and by Husch Blackwell
The Court of Chancery of the State of Delaware found in favor of the defendants and concluded that shareholders received a fair value for shares of John Q. Hammons Hotels (JQH) at the time of its merger with JQH Acquisition. In its opinion, the court stated that, “In short, defendants’ evidence of fair value was more convincing, more persuasive and more thorough, and plaintiffs’ evidence was comparatively weak. Consequently, the outcome of this case is not in doubt.” The court also concluded that the controlling shareholder did not breach any fiduciary duty and that JQH Acquisition could not be liable for aiding and abetting the nonexistent fiduciary duty breach.
The Court of Chancery of the State of Delaware found in favor of the defendants and concluded that shareholders received a fair value.
Defense counsel retained Cornerstone Research to conduct valuation analyses in this merger and acquisition transaction dispute. The plaintiffs claimed that an inadequate price was paid to minority shareholders for the publicly traded stock of JQH during its merger with JQH Acquisition, a third party. The plaintiffs also claimed that John Q. Hammons, JQH’s controlling shareholder, breached his fiduciary duty by negotiating private benefits in the transaction that were not available to minority shareholders and that JQH Acquisition aided in the alleged breach.
Cornerstone Research worked with a finance expert to determine the value of the JQH shares at the time of the merger and various aspects of the consideration paid to the controlling shareholder. Using a discounted cash flow analysis, the expert testified that the minority shareholders received a fair price per share of JQH stock and that the consideration received by the controlling shareholder represented an amount below the per-share price received by the minority shareholders. The plaintiffs’ expert failed to produce any evidence to the contrary.
Alan Stone, partner of Milbank, Tweed, Hadley & McCloy and Practice Group Leader of the firm’s Global Litigation Department, said, “Once again, my team turned to Cornerstone Research to provide high-quality valuation analyses and to prepare our expert for trial. Cornerstone Research has been a key component of our effort in this and a number of other successful trials.”