- Court upholds Chancery’s dismissial in August
- Lower court said suit didn’t imply directors acted in bad faith
(Reuters) – The Delaware Supreme Court has upheld the dismissal of USG Corp shareholders’ suit accusing the sheetrock maker’s board of succumbing to pressure to sell the company to German construction products maker Gebr Knauf KG for $7 billion.
Chief Justice Collins Seitz Jr. said on Wednesday that the court agreed with Vice Chancellor Sam Glasscock’s August 2020 opinion dismissing the suit for failing to reasonably imply that the USG directors acted in bad faith.
Attorneys for the USG shareholders and directors did not immediately respond to requests for comment on Thursday.
USG agreed to be acquired by Knauf, its largest shareholder, in June 2018. Negotiations for the deal started when Berkshire Hathaway CEO Warren Buffett partnered with Knauf to sell his stake in USG.
Minority shareholders later sued the USG directors, alleging that Berkshire Hathaway and Knauf “exerted such pressure on the Board to sell that the Board knowingly acquiesced to a sale that it knew undervalued USG.”
The board has denied the allegations. Representatives for USG declined to comment, while representatives for Knauf and Berkshire Hathaway did not immediately respond to requests for comment.
The case is Anderson et al. v. Leer, et al, Delaware Supreme Court, No. 106-2021.
For the shareholders: Michael Palestina of Kahn Swick & Foti and Juan Monteverde of Monteverde & Associates
For the USG directors: Robert Faxon and Adrienne Ferraro Mueller of Jones Day
(UPDATE: This story has been updated with a representative for USG declining to comment.)
USG takes $7 billion offer from Knauf after spurned advances