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
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 Celeras business was losing traction. The second tier allowed Quest to squeeze out remaining shares for the same price without a vote by shareholders. ....