The Third Circuit affirmed the lower court’s rejection of arguments by an aggrieved minority shareholder objecting to a short form merger that resulted in an allegedly diminished share price.
Plaintiff alleged that corporate defendants breached their fiduciary duties of loyalty, care and good faith in a 2006 Delaware short form merger. Relying on the Delaware short form merger statute which limits, absent fraud or illegality, minority shareholder rights to an action for share price appraisal, the court rejected all of plaintiff’s objections. First, it held that plaintiff’s allegations that shareholder value had diluted were insufficient allegations of fraud or illegality to justify relief beyond the exclusive statutory remedy of an action for an appraisal. Further, under the Delaware short form merger statute, minority shareholder approval was not required in order to proceed with a merger. Finally, the court ruled that the defendant corporation properly complied with Delaware’s appraisal statute by giving sufficient notice of the merger. (Radmore v. Aegis Commc’ns Group, Inc., No. 08-4751, 2009 WL 3041991 (3d Cir. Sept. 15, 2009))