In re GGP, Inc. Stockholder Litig.

In re GGP, Inc. Stockholder Litig.

Opinion

MEMORANDUM OPINION

SLIGHTS, Vice Chancellor

"In the beginning there was noise. Noise begat rhythm. And rhythm begat everything else."¹ As a species, human beings are instinctively attracted to rhythm. As a subspecies, corporate litigators are no different. In the realm of Delaware post-closing shareholder litigation, over the past seven years, a rhythm has emerged in the assertion of claims and defenses as our courts have clarified and refined the application of standards [*3]  for reviewing fiduciary conduct. In hopes of securing more rigorous judicial scrutiny of fiduciary conduct, stockholders invoke the sounds of minority blockholders who act as if they are controlling stockholders, fiduciary decisionmakers who are overcome by allegiances to the controller, and stockholders who are coerced to sell their shares while starved of accurate and complete information. In hopes of securing more judicial deference to fiduciary decision making, defendants invoke the sounds of passive minority blockholders and presumptively disinterested, independent (and often exculpated) fiduciaries who have faithfully served fully informed, uncoerced stockholders. When laid down on the same track, the sounds can be perceived as noise. But to the accustomed ear, there is rhythm.

On August 28, 2018, GGP, Inc. ("GGP" or the "Company") entered into a merger (the "Transaction") with Defendants, Brookfield Property Partners, L.P. ("BPY") and its affiliates (the "Brookfield Affiliates" and, together with BPY, "Brookfield"). Prior to the Transaction, Brookfield owned 35.3% of GGP's shares. As a result of the Transaction, Brookfield acquired all of the Company's [*4]  shares it did not own in exchange for a combination of cash and either of two forms of equity, representing 61% and 39% of the consideration, respectively. Structurally, the deal consideration would be paid in two parts: (1) a pre-closing dividend of cash and shares, amounting to about 98.5% of the deal consideration (the "Pre-Closing Dividend"), and (2) $0.312 per share in cash at closing, representing the balance of the deal consideration, capped at $200 million.

The Transaction was the culmination of negotiations that began in 2017, when Brookfield extended an offer to GGP's board of directors (the "Board") to acquire the balance of the Company's outstanding shares. As if striking a well-worn key on the piano, Brookfield asked GGP to appoint a committee of independent directors to evaluate the offer and negotiate the Transaction, and clarified that any final deal would "be subject to customary approvals including . . . approval of a majority of the Company's stockholders not affiliated with [Brookfield]."² The Board did not miss a beat and appointed a special committee (the "Special Committee") the next day. At the same time, the three Board members affiliated with Brookfield, each [*5]  Defendants here, formally recused themselves from the process.

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