Americas Mining Corporation v. Theriault

Supreme Court of Delaware · 2012 · Corporations

51 A.3d 1213 (2012)

Updated August 22, 2026

Corporationsfiduciary dutiesentire fairnesscontrolling shareholder transactionsattorneys' feescontroller self-dealingspecial committeefair dealing

Facts

Grupo Mexico controlled Southern Peru and caused it to consider acquiring Grupo Mexico's 99.15% interest in Minera in exchange for Southern Peru stock. Although Southern Peru formed a Special Committee and retained Goldman, Goldman's early analyses showed a large gap between the market value of the stock Southern Peru would give and the value of Minera it would get, yet the committee moved to relative valuation methods that devalued Southern Peru and supported Grupo Mexico's demand. The Special Committee operated under a narrow mandate, did not pursue alternatives, accepted a fixed-share structure, and ultimately approved issuance of 67.2 million shares worth about $3.1 billion at signing for Minera, which the Court of Chancery later valued at about $2.4 billion. The merger closed after Southern Peru's stock price rose sharply, and the committee did not obtain a meaningful fairness update before the stockholder vote or closing.

Issue

Whether the Court of Chancery erred in concluding that the merger between Southern Peru and its controller's affiliate was not entirely fair, in keeping the burden of persuasion on the defendants, and in awarding damages and attorneys' fees. Also, whether the trial court abused its discretion in refusing to modify the trial schedule to accommodate a late Goldman witness.

Rule

A transaction involving self-dealing by a controlling shareholder is reviewed for entire fairness, with the defendants bearing the burden of proving both fair dealing and fair price unless they establish a qualifying procedural protection under Lynch, such as approval by a well-functioning independent special committee or an informed majority-of-the-minority vote. To obtain a burden shift through a special committee, the committee must not be merely independent in form but must function effectively, exercise real bargaining power at arm's length, and show that the controller did not dictate the transaction's terms. Prospectively, if the record does not permit a pretrial determination that defendants are entitled to a burden shift, the burden of persuasion remains with defendants throughout trial. In common-fund cases, Delaware applies Sugarland's multifactor approach, giving greatest weight to the benefit achieved, not a mandatory lodestar or per se declining-percentage rule.

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

Red Mesa Holdings controls 58% of Silver Basin Metals, a Delaware corporation based in Phoenix. Red Mesa proposes that Silver Basin acquire Red Mesa's privately held affiliate in Nevada for newly issued Silver Basin shares; an independent committee is formed, but it accepts Red Mesa's stock-for-asset structure, never explores any alternative transaction, and negotiates only within the controller's price range.

If minority stockholders challenge the transaction, which is the best statement about the standard of review and burden of persuasion?

Explanation. A controller self-dealing transaction is reviewed for entire fairness. The burden stays with defendants unless they establish a qualifying procedural protection, such as a well-functioning independent special committee. Mere formation of a committee is not enough; the committee must function effectively, exercise real bargaining power, and show the controller did not dictate the terms.