Settlement Approved In Tibco Software Inc., Stockholder Litigation

In In re Tibco Software, Inc., Stockholders Litig., Consol. C.A. No. 10319-CB (Del. Ch.), the Faruqi firm and another firm supported two firms appointed as Lead Counsel in an action where Plaintiff brought an aiding and abetting claim against Goldman Sachs & Co. (“Goldman”) and a reformation claim against the buyer, Vista Equity Partners (“Vista”) in connection with a $4.2 billion sale announced in 2014.  The case alleged that Goldman, after the merger agreement was executed, discovered that it had used an inaccurately inflated share count when it conducted its fairness analysis.  Plaintiff recognized that the proxy statement reported a total equity value that was $100 million below the amount the parties had previously announced.  Vista allegedly trimmed its initial offer by $100 million based on the error.  After extensive litigation, the action settled with $30 million additional compensation going to the shareholders.  The Settlement was approved on September 7, 2016.

“Ultimately this case had two key aspects: a reformation claim and an aiding and abetting claim, each of which has very significant legal challenges associated with them,” Chancellor Bouchard said. “Those are hard claims to prove.”

During the Settlement Hearing in open court on September 7, 2016, Chancellor Bouchard said that he was just 24 hours away from a decisive, but undisclosed, ruling on one of the claims, when he learned the parties settled.  Thus, the action emphasizes the importance of timing when parties decide to settle.  Had the parties not settled prior to the Chancellor’s decision, one of the parties would have lost significant leverage or more.

The settlement terms limit distributions to those who submit claims, so that distributions will potentially be greater than 33 percent of the damage amount if some stockholders fail to submit forms.