City of N. Miami Beach Gen. Employees' Ret. Plan v. DR Pepper Snapple Grp., Inc.

Summary

The Delaware Court of Chancery held that Dr Pepper stockholders were not entitled to appraisal rights under 8 Del. C. § 262 in connection with a proposed reverse triangular merger involving Maple Parent and Merger Sub. The court concluded that Dr Pepper was not a constituent corporation in the merger and that its stockholders were retaining their Dr Pepper shares rather than being required to relinquish them. The court granted defendants' motions for summary judgment and denied plaintiffs' cross-motion.

Holdings

1. The term "constituent corporation" in Section 262 means an entity actually being merged or combined with another entity; it does not include the parent of a corporation participating in the merger. Because Dr Pepper was not being merged or combined, its stockholders had no statutory appraisal rights.
2. Dr Pepper stockholders were not entitled to appraisal rights because they were not required to relinquish their Dr Pepper shares or accept consideration for those shares in the merger.

Questions Presented

1. Whether Dr Pepper stockholders are entitled to appraisal rights under 8 Del. C. § 262(b) when Dr Pepper is the parent of a subsidiary participating in a reverse triangular merger but is not itself being merged or combined.
2. Whether Dr Pepper stockholders are entitled to appraisal rights when they retain their Dr Pepper shares and are not required to exchange or relinquish those shares in the transaction.
3. Whether the preliminary proxy statement violated 8 Del. C. § 262(d)(1) or fiduciary duties by stating that Dr Pepper stockholders lacked appraisal rights.

Disposition

other