Shareholder Litigation Against Terra Dismissed

On July 14, 2010, the Maryland state court denied plaintiff’s motion for summary and granted a motion to dismiss in favor of Cravath client Terra Industries Inc. and its directors. The plaintiffs alleged that the Terra board breached fiduciary duties by accepting an offer from Yara International ASA in February 2010 and then agreeing to pay Yara a $123 million termination fee when CF Industries Holdings, Inc. made a superior offer to acquire Terra in March 2010. The court ruled that the exculpation provision in Terra’s corporate charter immunized the board from liability, that the process followed by the board met the Revlon standard, and that the termination fee and other provisions of the merger agreement were standard terms that could not be challenged.

The Cravath lawyers included partner Max R. Shulman and associates Rebecca Rettig, Scott S. Bernstein and James W. Carlson.