In re TriQuint Semiconductor, Inc. Stockholders Litigation
Date Submitted: June 9, 2014.
Brian D. Long, Esquire, Rigrodsky & Long, P.A.
Peter J. Walsh, Jr., Esquire, Potter Anderson & Corroon LLP.
Kenneth J. Nachbar, Esquire, Morris, Nichols, Arsht & Tunnell LLP.
Plaintiffs, shareholders of TriQuint Semiconductor, Inc. ("TriQuint"), moved to expedite their claims that TriQuint's board breached its fiduciary duties by agreeing to a stock merger with RF Micro Devices, Inc. ("RFMD"). Specifically, Plaintiffs contend that TriQuint's eight-member board failed to obtain adequate consideration for shareholders, engaged in defensive tactics to thwart an activist investor's threat to replace the board, agreed to preclusive deal provisions, and failed to provide all material information in advance of the shareholder vote.TriQuint and RFMD have agreed to a so-called merger of equals, in which the shares of each company will be exchanged for shares of newly-formed Rocky Holding, Inc. ("Rocky Holding"), with the shareholders of each company set to own 50% of the new entity. Neither TriQuint nor RFMD has yet scheduled a special meeting to seek shareholder approval.
Some brief background is necessary. Before agreeing to the merger, TriQuint had been contemplating a possible combination with RFMD for almost five years. More recently, in February 2013, RFMD proposed to acquire TriQuint in an all-stock transaction. TriQuint's board determined that RFMD's offer was inadequate in April 2013. Two months later, Company B submitted an unsolicited cash offer to acquire TriQuint for $8.25 per share; TriQuint's board again decided not to pursue a sale at that time.
In August 2013, TriQuint and RFMD began new discussions on a possible merger of equals. Soon thereafter, TriQuint's board authorized Goldman Sachs, its financial advisor, to contact Company B and assess its interest in a business combination. By November 2013, TriQuint received a term sheet from RFMD and an indication of interest from Company B to acquire TriQuint for $10.00 per share through a 50% cash and 50% stock transaction. In December, in the midst of considering these proposals, the TriQuint board received a letter from one of its shareholders, Starboard Value ("Starboard"), proposing a new slate of six director nominees for the company's 2014 annual meeting.
On December 13, 2013, the TriQuint board decided it would not accept RFMD's offer because of concerns regarding potential market reaction to both companies' near term financial results. TriQuint's board sought to improve Company B's proposal and was informed by Goldman Sachs, on December 15, that Company B had increased its 50% cash and 50% stock offer to $10.10 per share. On December 17, 2013, TriQuint's board decided not to pursue either transaction.
Meanwhile, Starboard met with RFMD at the end of January 2014 to pitch the merits of a merger with TriQuint. RFMD soon notified TriQuint, which resulted in TriQuint's CEO contacting Company B's CEO and scheduling a meeting with another possible acquirer, Company C. TriQuint also requested Goldman Sachs to reengage with RFMD's financial advisor regarding a possible transaction. For unclear reasons, Company B withdrew from the process on February 18, 2014. That same day, TriQuint's board decided to pursue a transaction with RFMD. The sale process culminated on February 22, 2014, when, after receiving a fairness opinion from Goldman Sachs, TriQuint's board approved the merger with RFMD.
During the briefing of this motion, TriQuint filed an amended proxy statement disclosing information underlying several of Plaintiffs' disclosure claims. Plaintiffs do not dispute that those issues have been resolved, although the parties may disagree about whether there was any causal connection between the initial claims and the supplemental disclosures. Accordingly, the Court considers Plaintiffs' remaining claims related to the merger process, certain deal protection devices in the merger agreement, and the remaining disclosure issues.
Plaintiffs bear the burden of showing good cause for expedited proceedings.The standard for a motion to expedite is familiar: the Court must determine "whether in the circumstances the plaintiff has articulated a sufficiently colorable claim and shown a sufficient possibility of a threatened irreparable injury, as would justify imposing on the defendants and the public the extra (and sometimes substantial) costs of an expedited preliminary injunction proceeding."
A. The Process Claims
Plaintiffs primarily contend that TriQuint's board members, in response to Starboard's letter, took defensive actions to retain their lucrative positions by fast-tracking the negotiations with RFMD to preserve the seats of five of eight TriQuint directors in the post-merger entity. They assert that TriQuint's board staved off a cash offer from another bidder, Company B, and favored RFMD—and the possibility of post-merger ...