Oracle Corp. founder Larry Ellison won a pension fund lawsuit over the company’s 2016 acquisition of rival software maker NetSuite Inc., as a judge ruled that the transaction was negotiated at arm’s length by a “fully-empowered special committee.”
(Bloomberg) — Oracle Corp. founder Larry Ellison won a pension fund lawsuit over the company’s 2016 acquisition of rival software maker NetSuite Inc., as a judge ruled that the transaction was negotiated at arm’s length by a “fully-empowered special committee.”
The investor suit, brought in Delaware Chancery Court, accused Ellison and Oracle of overpaying by $3 billion for NetSuite. Ellison owned 47% of the company at the time of the $9.3 billion deal and held about 28% of Oracle’s shares.
Vice Chancellor Sam Glasscock III said in a decision Friday that Ellison withdrew from Oracle’s consideration of the acquisition just before an initial presentation to the board and that “the remaining directors empowered a special committee to conduct the negotiation of any acquisition of NetSuite.”
The lawsuit by the Firemen’s Retirement System of St. Louis accused Ellison and Oracle Chief Executive Officer Safra Catz of orchestrating the combination when NetSuite’s sales were slowing because of increased competition from Oracle.
Read the court’s opinion here
“Today’s decision constitutes a complete vindication of Mr. Ellison and Ms. Catz, each of whom has been subject to these baseless claims for seven years — notwithstanding their consistent and uncompromising devotion to Oracle and its stockholders throughout their storied tenures with the company,” Peter Wald, an attorney for Ellison and Catz, said in a statement.
A representative of the plaintiffs didn’t respond to requests for comment on the decision.
Glasscock said that as a “force at Oracle” and “the main creative party and a face of the company,” Ellison could have attempted to influence the board’s decision, but didn’t.
“The concept that an individual — without voting control of an entity, who does not generally control the entity, and who absents himself from a conflicted transaction — is subject to entire fairness review as a fiduciary solely because he is a respected figure with a potential to assert influence over the directors, is not Delaware law, as I understand it,” Glasscock wrote.
The case is In Re Oracle Corp. Derivative Litigation, 2017-0337, Delaware Chancery Court.
Read More: Larry Ellison Denies Keeping Oracle Reins After Exiting CEO Role
–With assistance from Brody Ford.
(Updates with comment from defense counsel.)
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