The Delaware Court of Chancery has denied activist investor Daniel S. Loeb’s lawsuit to overturn auction house Sotheby’s poison pill plan and enjoin the company’s 2014 annual meeting. In issuing the opinion, the court held that Loeb failed to prove the plan unfairly limited stockholder rights and discriminated against activist investors.
“The facts here do not support the conclusion that plaintiffs have a reasonable probability of demonstrating that the board adopted the rights plan in October 2013 for the primary purpose of interfering with the franchise of any stockholder,” Vice Chancellor Donald F. Parsons Jr. said in Third Point LLC v. Ruprecht. “Because it is reasonably likely that the board will be able to show that they were motivated to adopt the rights plan in response to this control threat and … plaintiffs have not shown that it is reasonably probable that plaintiffs will be able to establish that interference with the franchise was a major, let alone primary, purpose behind the board’s decision.”
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