Lessons on Disputing Party Transactions from the NC Decision

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By Eric Pearson, Beth Boland and Philip Babler (January 27, 2022, 4:48 PM EST) — The North Carolina Supreme Court recently ruled that dissenting shareholders in Reynolds American Inc.’s 2017 merger with British American Tobacco n entitled to more consideration than the transaction price — even in a conflicting party transaction where the acquirer already owns a significant stake in the target company and publicly announces its opposition to consideration of other transactions.

The decision of December 17, 2021, Reynolds American Inc. v. Third Motion Equities Master Fund Ltd. has important implications for future business acquisitions in states, like North Carolina, that have passed the Model Business Corporation Act.

Despite BAT’s near majority stake in Reynolds American and…

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