K. Tyler O’Connell of Morris James.
In In re USG Corporation Shareholder Litigation, (Del. Ch. Aug. 31, 2020), the Delaware Court of Chancery granted the director-defendants’ motions to dismiss post-closing money damages claims arising out of the sale of USG Corp. (USG) for less than what USG’s directors allegedly thought was its intrinsic value. Although the failure to disclose such “intrinsic value” prevented dismissal under Corwin v. KKR Financial Holdings, 125 A.3d 304 (Del. 2015), Vice Chancellor Sam Glasscock III held that, in the circumstances, omission and the directors’ approval of the sale did not suffice to plead a breach of the directors’ fiduciary duty of loyalty.
The Transaction
The stockholder-plaintiffs’ claims arose from the 2018 acquisition of USG, a leading American producer of building materials, by Gebr Knauf KG and its affiliates (collectively Knauf). Knauf was a German manufacturer that owned 10.6% of USG’s stock. Berkshire Hathaway owned an additional 31.1% and had indicated publicly that it wished to exit its investment.
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