International Law Office (ILO) published an article by private equity partner Jason Freedman (San Francisco) and associate James Davis (Chicago) that discusses the Delaware Supreme Court’s decision in In re KKR Financial Holdings LLC Shareholder Litigation, which upheld a Delaware Chancery Court ruling that a management entity with operational control of a target, but holding only 1 percent of its stock and without control of the board of directors, was not a controlling stockholder. The court further held that because there was no controlling stockholder, a fully informed vote of the disinterested stockholders approving the transaction would subject the transaction to business judgment review, rather than the more demanding standard of entire fairness review.
The article appeared in ILO’s Corporate Finance/M&A Newsletter on Feb. 10.
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