In re Synthes, Inc. Shareholder Litigation
Delaware Court of Chancery
50 A.3d 1022 (2012)
Hansjoerg Wyss (defendant), Synthes's controlling stockholder and former longtime CEO, wanted to liquidate his large stock position without depressing the company's market price, so Synthes needed a merger transaction; Wyss and the board rejected an offer that would have cashed out only minority stockholders while keeping Wyss invested, instead negotiating a higher-priced Johnson & Johnson deal in which all stockholders, including Wyss, received the same 65% stock / 35% cash consideration. Minority stockholders (plaintiffs) sued, arguing Wyss's desire for liquidity made the merger a conflicted transaction subject to entire fairness review, and the defendants moved to dismiss.
In approving a transaction, does a controlling stockholder have a duty to accept worse or less consideration than the minority stockholders to enable the minority stockholders to receive a better deal?