American Italian Pasta Company: Shareholders challenge top-up option in merger

This expedited merger litigation challenged provisions of a merger agreement that granted the acquiring company a top-up option to purchase additional shares in the event that less than 90% of the shares were tendered.

Our client, the Erie County Employees’ Retirement System, asserted that the top-up option violated Delaware law and threatened the rights of shareholders to seek post-closing appraisal. In settling the litigation, the parties agreed to substantially rewrite provisions of the merger agreement and issue significant additional disclosures before closing.