- July 27, 2021
- Posted by: Stratford Team
- Category: Business
In Shareholder Representative Services LLC v. Albertsons Cos., the Delaware Court of Chancery denied a motion to dismiss claims that a buyer intentionally avoided an earnout payment by misleading the seller about its plans to operate the acquired business after closing. The case provides additional guidance in the ever-growing body of case-law addressing “business conduct” clauses in earnout agreements.
The dispute arose from a merger agreement (the “Agreement”) pursuant to which Albertsons Companies acquired the internet meal-kit provider, Plated. Under the terms of the Agreement, Albertsons’ paid the former stockholders of Plated cash consideration of US$175 million, in addition to US$125 million in earnout consideration if Plated achieved certain performance milestones for the three-year period after the transaction.
The Agreement prohibited Albertsons from taking any action with the intent to decrease or avoid an earnout, but it…
