Document: In re Micromet, Inc. S’holders Litig., C.A. No. 7197-VCP (Del. Ch. Feb. 29, 2012)
The Delaware Court of Chancery found that plaintiffs had not shown a reasonable likelihood of success on the merits of their claims that the directors of Micromet, Inc. (“Micromet”) breached their fiduciary duties under Revlon in agreeing to be acquired by Amgen, Inc. (“Amgen”) in an all-cash, negotiated tender offer. Accordingly, the Court denied plaintiffs’ request for a preliminary injunction.
Micromet, an early stage pharmaceutical research and development company, received an initial bid of $9.00 per share from Amgen in July 2011, which the Micromet board deemed inadequate. Amgen continued to court Micromet over the next five months with offers that Micromet rejected, while Micromet pursued strategic partnerships. In January 2012, Amgen increased its offer price to $11.00 per share, and the Micromet board authorized Goldman Sachs, its banker, to conduct a market check. None of the companies contacted by Goldman Sachs made an offer, and Micromet and Amgen entered into a definitive agreement.
Plaintiffs alleged that Micromet’s sales process was wholly deficient under Revlon. First, plaintiffs challenged the board’s decision to eschew private equity buyers. According to the Court, the board acted reasonably in focusing on large pharmaceutical companies that would have both the capital and technical expertise necessary to commercialize and distribute Micromet’s technologies. Plaintiffs also alleged that the market check was deficient because potential buyers had been given only a week to conduct due diligence. However, six of the seven potential buyers had conducted limited due diligence on Micromet during its partnering process. Given the prior access and the fact that Amgen only had access to due diligence materials over a two-week period, the Court held that the Micromet board acted reasonably.
The Court also rejected all of plaintiffs’ disclosure claims. The claims rejected by the Court included a claim that Micromet was required to disclose management’s “upside case” projections. The projections were not relied upon by Goldman Sachs, and Micromet’s management testified that the projections were not reliable.