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Zale Corporation Defeats Shareholder Motion to Preliminarily Enjoin Merger with Signet Jewelers

On May 23, 2014, Vice Chancellor Donald F. Parsons, Jr. of the Delaware Court of Chancery denied a motion to preliminarily enjoin Cravath client Zale Corporation’s planned $1.4 billion sale to Signet Jewelers Limited, which will create the world’s largest specialty jewelry retailer. The decision was handed down immediately following oral argument and comes less than a week before a scheduled stockholder vote on the deal.

Public shareholders brought class action lawsuits (now consolidated) against the corporation and its board of directors in February and March 2014, alleging that Zale’s directors breached their fiduciary duties in entering into the merger agreement and failing to disclose in the proxy statement material information regarding the transaction. At the end of the one‑day preliminary injunction hearing, Vice Chancellor Parson denied plaintiffs’ motion, finding that plaintiffs failed to show either a substantial likelihood of success on the merits of their complaint or that they would be irreparably harmed if the transaction proceeded -- both required elements for an injunction.