The Delaware Court of Chancery recently approved a plan to sell TransPerfect Global, Inc. (“TransPerfect” or the “Company”) to co-owner Philip Shawe. In the Court’s most recent opinion issued earlier on February 15, 2018, In re TransPerfect Global, Inc., C.A. No. 9700-CB (Del. Ch. Feb. 15, 2018), Chancellor Bouchard approved a sale agreement that permitted Shawe to acquire shares of the company owned by Elting. Specifically, the Court accepted the recommendation of the court-appointed Custodian to approve a transaction in which one of the co-founders of TransPerfect Global, Inc. (Philip Shawe) will acquire the shares held by the other co-founder (Elizabeth Elting) to resolve the pending litigation.
From March through November 2017, the Custodian conducted an extensive sales process to follow the Court’s mandate “to sell the Company with a view toward maintaining the business as a going concern and maximizing value for the stockholders.” After three formal rounds of bidding and an informal fourth round to elicit “final” bids, two leading bidders emerged: Shawe and H.I.G. Middle Market, LLC (“H.I.G.”), the owner of TransPerfect’s leading competitor. The Custodian believed that Shawe would offer greater consideration
than H.I.G. with fewer closing conditions, while retaining virtually all of the Company’s employees, and thus negotiated with Shawe to finalize a transaction.
Co-owner Elizabeth Elting objected to the Custodian’s recommendation that the court approve the Sale Agreement, asking the Court to reject the Sale Agreement and to direct the Custodian to negotiate a transaction with H.I.G. The Court rejected each of Elting’s objections, while providing guidance on the discretion of a Court-appointed custodian in selling a deadlocked corporation.
By way of background, in November 2017, Chancellor Bouchard approved a modified auction of the Company, over the objections of Shawe. For a link to a prior post discussing the November 2017 opinion, click here. Prior to that, in September 2017, the Court denied an application for interlocutory appeal filed by Philip Shawe’s mother, who is a 1% stockholder of the Company. The appeal request was filed in response to the Court’s denial of Ms. Shawe’s request to hold an election under Section 211 of the DGCL. Click here for a post discussing the September 2017 opinion.
UPDATE: On May 3, 2018, the Delaware Supreme Court affirmed the February 15, 2018 opinion of Chancellor Bouchard approving the sale of TransPerfect, summarized above.
Carl D. Neff is a partner with the law firm of Fox Rothschild LLP. Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at email@example.com.