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ACP Master, Ltd. v. Sprint Corp.

ACP Master, Ltd. v. Sprint Corp.

Court of Chancery of Delaware

April 25, 2017, Submitted; July 21, 2017, Decided; July 21, 2017, EFiled

C.A. No. 8508-VCL, C.A. No. 9042-VCL.

Opinion

MEMORANDUM OPINION

LASTER, Vice Chancellor.

In July 2013, Clearwire Corporation ("Clearwire" [*2]  or the "Company") and Sprint Nextel Corporation ("Sprint") completed a merger in which Sprint paid $5.00 per share to acquire the 49.8% of Clearwire's equity that Sprint did not already own (the "Clearwire-Sprint Merger"). Sprint's acquisition of Clearwire was part of a broader effort by Softbank Corp. ("Softbank"), the largest telecommunications company in Japan, to enter the United States cellular telephone market. Contemporaneously with the closing of the Clearwire-Sprint Merger, Softbank acquired majority control of Sprint (the "Sprint-Softbank Transaction").

Entities associated with Aurelius Capital Management, LP (collectively, "Aurelius") held shares of Clearwire common stock when the Clearwire-Sprint Merger closed. Aurelius filed a plenary lawsuit which contended that the merger resulted from breaches of fiduciary duty by Sprint, aided and abetted by Softbank. Aurelius also filed a statutory appraisal proceeding. The cases were consolidated and tried.

For purposes of the plenary action, assuming that entire fairness is the governing standard of review, Sprint proved at trial that the Clearwire-Sprint Merger was entirely fair. Judgment is entered in Sprint's favor on the claim [*3]  for breach of fiduciary duty and in Softbank's favor on the claim for aiding and abetting.

For purposes of the appraisal proceeding, Sprint proved that the fair value of the Company's common stock at the effective time of the Clearwire-Sprint Merger was $2.13 per share. Aurelius did not prove its more aggressive valuation contentions. Judgment in the appraisal proceeding is entered in favor of Aurelius for that amount, plus interest at the legal rate, compounded quarterly.

I. FACTUAL BACKGROUND

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2017 Del. Ch. LEXIS 125 *; 2017 WL 3105858

ACP MASTER, LTD., et al., Plaintiffs, v. SPRINT CORPORATION, et al., Defendants.ACP MASTER, LTD., et al., Petitioners, v. CLEARWIRE CORPORATION, Respondent.

Notice: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.

Subsequent History: Date Corrected: August 8, 2017.

Affirmed by ACP Master, Ltd. v. Sprint Corp., 2018 Del. LEXIS 173 (Del., Apr. 23, 2018)

Prior History: ACP Master, LTD v. Sprint Corp., 2014 Del. Ch. LEXIS 117 (Del. Ch., June 19, 2014)

CORE TERMS

merger, per share, spectrum, Build, stockholders, Projections, special committee, Customer, Strategic, negotiations, Investors, financing, billion, shares, network, wholesale, acquire, valuation, buy, sites, stock, minority stockholder, unfair dealing, shareholders, rights, fair value, plans, presentation, acquisition, forecasted

Business & Corporate Law, Shareholder Duties & Liabilities, Controlling Shareholders, Causes of Action, Evidence, Burdens of Proof, Allocation, Fiduciary Duties, Mergers & Acquisitions Law, Mergers, Duties & Liabilities of Shareholders, Duties & Liabilities of Directors & Officers, Agency Relationships, Fiduciaries, Mergers, Torts, Intentional Torts, Breach of Fiduciary Duty, Elements, Rights of Dissenting Shareholders