In In re Tibco Software Stockholders Litigation, Consol. C.A. No. 10319-CB (Del. Ch. Nov. 25, 2014), Delaware Court of Chancery Chancellor Andre G. Bouchard declined to enjoin a stockholder vote on a merger between Tibco Software Inc. and Vista Equity Partners V L.P., notwithstanding a share-count miscalculation that resulted in the total purchase price being $100 million less than originally announced. The opinion is notable for a number of reasons. First, the court made clear that a preliminary injunction will not issue where damages are “quantifiable,” even though perhaps not ultimately recoverable from a target’s board; however, the court noted that stockholder plaintiffs are not necessarily without recourse because a stockholder could seek recovery from third parties who may have aided and abetted wrongdoing. Second, the court found that the balance of equities weighed in Tibco’s favor because the robust sales process had apparently resulted in the highest available price for stockholders and the miscalculation at issue had been fully disclosed before the stockholder vote. Third, the court stressed that market participants must pay careful attention to the “mechanics” of deals and for deal teams to relay all material information as promptly as possible to boards and other key players.
The Transaction
This case arose out of Vista’s agreement to purchase Tibco for $24 per share. In arriving at the per-share price, both parties had relied on inaccurate information as to the number of fully diluted Tibco shares. Vista and Tibco publicly announced that Vista would purchase Tibco for an enterprise value of approximately $4.3 billion (or an equity value of $4.24 billion). Due to the share-count miscalculation, the enterprise value implied by the $24-per-share price was actually $100 million less, or $4.2 billion (in turn, the equity value was also less, at $4.14 billion).
