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Delaware Supreme Court Rejects Challenge to C&J Energy/Nabors Merger

Published: 03-28-2017

C&J Energy Services, Inc. and certain of its former directors and officers recently won a major victory at the Delaware Supreme Court, overcoming a shareholder challenge to the company’s $2.9 billion transaction with Nabors Industries Ltd.

This was the lawsuit’s second trip to the Delaware Supreme Court. The first appeal resulted in a landmark opinion that reversed an injunction issued by the Delaware Chancery Court, which had required C&J to solicit alternative bids for the company from other potential buyers for a period of 30 days before conducting its stockholder meeting.

This time, the Delaware high court affirmed the Delaware Chancery Court’s dismissal, holding that the approval by C&J’s stockholders of the transaction foreclosed the plaintiff’s claims. Plaintiff had asserted that the stockholder vote was ineffective because C&J’s proxy statement did not disclose all material information, including the terms of a non-binding bid that was submitted during the court-ordered go-shop process.

According to the Court’s March 23, 2017 opinion, "Ultimately, the allegations of the complaint are what are relevant to our analysis, and the complaint does not contain pled facts supporting inferences that the proxy statement was materially misleading."

In addition to upholding the dismissal, the Supreme Court affirmed the Chancery Court’s award of $542,000 in damages to cover costs associated with the court-ordered solicitation process.

C&J is represented by V&E partners Michael Holmes and Craig Zieminski, senior associate Olivia Howe and associates Meriwether Evans and Meredith Jeanes.

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