In a long-awaited en banc decision, the Delaware Supreme Court has issued its most important ruling in years on the standard of review applicable to mergers when a controlling stockholder buys out the public. The decision, styled Americas Mining Corp. v. Theriault (Southern Peru), 51 A.3d 1213 (Del. 2012), constitutes the Delaware Supreme Court’s strong endorsement of the Court of Chancery’s trial ruling, and confirms that controlling-stockholder transactions present special risks for defendants and deal planners.
The appeal concerned a transaction in which Grupo México SAB, Southern Peru’s controlling shareholder, proposed selling one of its subsidiaries, Minera México S.A., a privately held company, to Southern Peru for $3.1 billion worth of Southern Peru’s listed stock. The transaction was thus plainly one in which the controlling stockholder (Grupo) would stand on both sides of the proposed transaction: It was directing one company it controlled to buy another company it controlled.
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