In In re Synthes, Inc. Shareholder Litigation, 50 A.3d 1022 (Del. Ch. 2012) (No. 6452), the Delaware Chancery Court clarified the fiduciary duties of controlling shareholders, and held that a controlling shareholder did not breach his fiduciary duty by refusing to consider an acquisition offer that would have cashed out all of the minority stockholders, but required the controlling stockholder to remain as an investor in the company. The case involved the sale of Synthes, a medical device company headquartered in Switzerland. The controlling stockholder, after giving a consortium of private equity buyers a chance to make an all-cash, all-shares offer, ultimately accepted a bid by Johnson & Johnson for 65% stock and 35% cash. The controlling stockholder received the same treatment in the merger as the other stockholders. Dismissing a complaint by minority shareholders challenging the merger, the court held that the “controlling stockholder had more incentive than anyone to maximize the sale price of the company, and Delaware does not require a controlling stockholder to penalize itself and accept less than the minority, in order to afford the minority better terms.” The court stressed that although controlling shareholders are “not allowed to use their control over corporate property or processes to exploit the minority,” Delaware law “does not . . . go further than that and impose on controlling stockholders a duty to engage in self-sacrifice for the benefit of minority shareholders” or “to act altruistically towards them.”
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Controlling shareholder need not act “altruistically” towards minority
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