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Manti Holdings, LLC v. Authentix Acquisition Co.

Court of Chancery of Delaware

June 27, 2018, Submitted; September 28, 2018, Decided

Civil Action No. 2017-0887-SG


This matter involves the sale via merger of Authentix Acquisition Co. (the "Company") by written consent, to a third-party Guernsey1 entity. The Petitioners seek a statutory appraisal under Section 262 of the DGCL. This brief Letter Opinion will address a narrow predicate issue: whether the Petitioners are barred by contract from exercising their appraisal rights.

The Petitioners are among the stockholders of the Company who lost their shares via the merger. The Company has moved for a judgment under the terms of a stockholders' agreement (the "SA"), to which the Petitioners and the Company were parties. The SA was entered in 2008 (and amended in 2009) to induce investment in the Company by investors, to whom I will refer collectively as the "Carlyle Group."2 The Carlyle Group was the majority stockholder and controller of the Company.3 According to Authentix, the Petitioners are barred contractually from asserting appraisal rights.4 The Petitioners read the contract differently. [*2] 5

After Authentix was sold, the cash consideration was (or will be) distributed to the various categories of stock via the waterfall provision of the Certificate of Incorporation.6 The Petitioners and other common stockholders (including the Carlyle Group) will, it appears, receive little or nothing for their equity interest in the Company.

On January 17, 2018, the Petitioners filed a Motion to Dismiss the Respondent's counterclaims, and on January 24, 2018, the Respondents filed a Motion for Partial Summary Judgment on Entitlement Issues. At oral argument, the parties agreed to consider the matter of waiver or estoppel of Petitioner's right to appraisal as submitted on a stipulated record.7 The facts are undisputed; it remains only to apply the law and the language of the SA to the facts. The nature of the motion practice—cross motions and briefing, cross openings and answers—led to the parties' issues and grounds for relief being less than perfectly congruent. Counsel raised issues at argument that were not clearly presented in the briefs, and other issues that were briefed were never mentioned. Accordingly, I allowed short post-argument submissions. I address here only [*3]  those issues presented at oral argument and in the supplemental submissions; issues not so presented I deem waived.8

Because I find the Petitioners contractually bound to refrain from seeking appraisal, the Company's motion is granted, and that of the Petitioners is denied. My reasoning follows.

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2018 Del. Ch. LEXIS 318 *; 2018 WL 4698255

Manti Holdings, LLC et al. v. Authentix Acquisition Co.


Subsequent History: Amended October 1, 2018.

Rehearing denied by Manti Holdings, LLC v. Authentix Acquisition Co., 2019 Del. Ch. LEXIS 307 (Del. Ch., Aug. 14, 2019)

Prior History: Manti Holdings, LLC v. Authentix Acquisition Co., 2018 Del. Ch. LEXIS 319 (Del. Ch., Sept. 28, 2018)


appraisal, stockholders, rights, parties, refrain, stock, merger, contractual, Conditions, obligations, termination, shares, waived

Business & Corporate Law, Corporations, Shareholder Actions, Appraisal Actions & Dissent Rights