Kahn v. M & F Worldwide Corp.

88 A.3d 635 (2014)


D is a holding company incorporated in Delaware. D was 43.4% owned by M&F, which in turn is entirely owned by Ronald O. Perelman. Perelman began to explore the possibility of taking D private. D's stock price traded in the $20 to $24 per share range. M&F engaged a bank, Moelis & Company, to advise it. Moelis valued D at between $10 and $32 a share. On June 10, 2011, D's shares closed on the New York Stock Exchange at $16.96. The next business day, June 13, 2011, M&F sent a letter proposal to D's board to buy the remaining D shares for $24 in cash. It stated that the transaction would be subject to the approval of the Board of Directors of D and the negotiation and execution of mutually acceptable definitive transaction documents. The expectation was that the Board of Directors will appoint a special committee of independent directors to consider our proposal and make a recommendation to the Board of Directors. M&F would not move forward with the transaction unless it is approved by such a special committee. In addition, the transaction will be subject to a non-waivable condition requiring the approval of a majority of the shares of the Company not owned by M&F or its affiliates. The D board met. Interested directors recused themselves from the meeting. The independent directors then invited counsel from Willkie Farr & Gallagher - a law firm that had recently represented a Special Committee of D's independent directors in a potential acquisition of a subsidiary of M & F - to join the meeting. The independent directors decided to form the Special Committee. The transaction completed and P sued. The trial court ruled that the entire form of the transaction was proper and refused P’s remedies. P appealed.