Opinion ID: 2159056
Heading Depth: 1
Heading Rank: 1

Heading: The Delaware Action and Settlement

Text: After Infinity shareholders filed eleven substantially identical complaints in the Court of Chancery, the court quickly consolidated the separate suits into a single action. [2] Each of these putative class actions alleged that Infinity, its board of directors, and Viacom breached their respective fiduciary duties of loyalty and care arising out of the factual assertion that the amount of Viacom stock offered as consideration for the merger was inadequate. In each instance, the proposed class consisted of all holders of Infinity common stock, excluding, of course, the defendants. The plaintiffs sought to enjoin the merger and to recover both compensatory and punitive damages, as well as attorneys' fees and costs. Once the court had consolidated the cases, the Chancellor appointed the law firms of Milberg Weiss Bershad Hynes & Lerach, LLP and Abbey Gardy & Squitieri as co-lead counsel and the Delaware firms of Chimicles & Tikellis and Rosenthal Monhait Gross & Goddess, P.A. as co-liaison counsel to oversee the prosecution of the Delaware Action. Concurrent to the litigation, and similarly in response to Viacom's offer, Infinity appointed a special committee of independent directors to provide recommendations to its board of directors concerning the proposed merger and to conduct any necessary negotiations with Viacom's representatives. The record reveals that the special committee and Viacom engaged in extensive talks concerning the terms of the tender offer. Among the most highly contested issues was the exchange ratio, which the special committee actively sought to increase. Class counsel in the Delaware Action also engaged in negotiations with Viacom's representatives concerning the need for an increase in the exchange ratio as part of any potential settlement. In late October, Delaware counsel reached a settlement with the defendants that, inter alia, increased the exchange ratio from the 0.564 shares of Viacom stock it proposed at the outset of its bid to 0.592 shares per Infinity share. During that same period of time, the special committee and Viacom's representatives were reaching an identical resolution. On October 30, 2000, on the advice of its financial advisors, [3] the committee voted to recommend that the Infinity board of directors approve the merger at the same exchange ratio of 0.592 shares of Viacom stock per Infinity share. Shortly thereafter, the parties to the Delaware Action presented the settlement to the Court. In turn, the Chancellor approved it.