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Blount International Wins Appeal Affirming Dismissal of Shareholder Class Action Litigation Related to Acquisition

On June 15, 2017, the Delaware Supreme Court affirmed a decision by the Delaware Court of Chancery granting a motion to dismiss a putative shareholder class action against Cravath client Blount International, Inc., and four of its directors. Shareholders challenged the $855 million acquisition of Blount in April 2016 by affiliates of American Securities LLC and P2 Capital Partners, LLC. The complaint alleged that P2, which was one of Blount’s largest stockholders, and Blount’s CEO and COO, who participated in the buy side and allegedly reduced Blount’s financial projections to facilitate the transaction, timed the merger to coincide with a cyclical low point in the company’s stock trading price, which resulted in inadequate consideration to the other stockholders.

The Delaware Supreme Court upheld Vice Chancellor J. Travis Laster’s ruling that the business judgment rule applied to the challenged conduct and that the plaintiffs failed to overcome the court’s ordinary deference to the business judgment of directors under Delaware corporation law.

The Cravath team included partner Gary A. Bornstein and associates R. Maxwell Tanner and Kyle Schneider. The case is Chester County Retirement System, et al. v. Collins, et al., No. 12072 (Del. Ch.), No. 603, 2016 (Del.).