Playtika Holding Corp., a Delaware corporation, was a controlled company with the majority of its stock held by Playtika Holding UK II Limited (Giant/Alpha). In August 2022, Giant/Alpha allegedly used its controlling position in Playtika to cause the Playtika board to engage in a self-tender. In a previous ruling, Vice Chancellor Sam Glasscock found that the transaction conferred Giant/Alpha a nonratable benefit and denied Giant/Alpha’s motion to dismiss claims against it arising from the transaction. But in Kormos v. Playtika Holding UK II Ltd., 2024 WL 1956268 (Del. Ch. May 3, 2024), the Vice Chancellor dismissed fiduciary duty claims against Playtika’s directors and officers based on their alleged approval of the unfair tender offer and “unauthorized communications” with Giant/Alpha. The plaintiffs alleged that the Playtika fiduciaries inhibited a special transaction committee’s ability to maximize value and perpetuated Giant/Alpha’s control of Playtika.

The basis for plaintiffs’ claims was that the sale process was driven by Giant/Alpha’s liquidity needs, which potentially suppressed competitive officers. Giant/Alpha faced a liquidity crisis, with $700 million in debt due by the end of June 2022, and more than $2 billion due by the end of 2022. At Giant/Alpha’s request, the Playtika board authorized management to help facilitate a stock sale by Giant/Alpha. In response to a press release, Joffre Capital, a private equity firm, expressed an interest to acquire 55% of Playtika’s outstanding shares for $27 per share from Giant/Alpha. Because this offer would trigger expensive change in control payments for Playtika, management told the board that it did not think Joffre’s initial interest would be feasible. The board met and concluded that Giant/Alpha’s efforts were causing market confusion, and formed the special committee.