Delaware Chancery Court Chides Pension Fund for Boosting Returns
New Orleans employee pension plan wins a pyrrhic victory against a drugmaker that sold itself too cheaply.
By S.L. Mintz
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Pension funds may have to think twice about selling shares while seeking to block what they consider unfairly priced acquisitions, if judicial admonishment that dimmed a recent victory for the New Orleans Employee Retirement System (Noers) in Delaware Chancery Court sets a precedent.
The little-noticed opinion in late March by vice chancellor Donald Parsons, Jr. affirmed a class action settlement arising from the sale of Celera Corporation to Quest Diagnostics in 2011. The original lawsuit charged that Celera breached fiduciary duty by conducting a defective two-tier sales process. The first tier set a tender offer price of $8 for Celera shares, far below $10.25 that Quest offered in June 2010, as Celera’s business was losing traction. The second tier allowed Quest to squeeze out remaining shares for the same price without a vote by shareholders. ....