Ex-Fresh Market Investors Reach $27.5M Deal In Merger Suit

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Former public stockholders of specialty grocery chain The Fresh Market reached a $27.5 million deal in Delaware Chancery Court late Thursday to settle a long-running suit over a purportedly unfair, $1.4 billion take-private sale of the business to affiliates of Apollo Global Capital in 2016.

According to court filings, class attorneys will be eligible to apply for up to 25% of the settlement, plus expenses, if stockholders approve the deal and the court approves the fee. Insurers or indemnifying parties will pick up the tab for all of those sued other than JPMorgan Chase & Co., the financial adviser for the deal. “For the avoidance of doubt,” the proposed settlement said, the settlement amount will not be paid by defendants.”

In the case, former Fresh Market CEO and chairman Ray Berry were accused of acting disloyally in concealing or lying about his private communications on terms of Apollo’s acquisition of the gourmet grocer to Apollo as well as an agreement on rollover of Berry’s equity as part of the deal.

Former company president and CEO Richard Anicetti, who succeeded Berry, and former chief legal officer and senior vice president Scott Duggan were accused of fiduciary duty breaches and are parties to the settlement as well. Eventually dismissed were the remaining outside director members of Fresh Market’s entire board, Apollo, and Cravath Swaine & Moore LLP. A Cravath lead partner represented The Fresh Market in the Apollo acquisition.

The settlement stipulation said lead stockholder Elizabeth Morrison “continues to believe that her claims have legal merit, but nevertheless recognizes and acknowledges the risk and uncertainty of prosecuting this action and collecting any damages from defendants.”

Those named in the suit entered into the settlement “solely because they consider it desirable that the action be settled and dismissed with prejudice in order to, among other things, eliminate the uncertainties, burden, inconvenience, distraction, and expense of further litigation,” the document said.

Terms of the deal provided releases from liability for those on both sides of the litigation.

Attorneys for the class, The Fresh Market and JPMorgan did not immediately respond to a request for comment.

The agreement potentially marks the final chapter in a tainted sale process and stockholder challenge dismissed by Vice Chancellor Sam Glasscock III in September 2017 but revived by a three-judge panel of Delaware’s Supreme Court in 2018.

The justices rejected the vice chancellor’s conclusion that stockholders were adequately informed about the deal’s terms during a tender offer, including about financial adviser JPMorgan’s alleged deception of the Fresh Market’s board about its communications with Apollo.

The decision was seen as refining Delaware’s standards for judging whether decisions by minority or independent stockholders can be viewed as fully informed, and when business judgment deference should give way to more plaintiff-friendly review standards.

A court filing detailing the proposed settlement noted that it was not an admission of liability, fault, wrongdoing or damages by those who remained in the suit.

Stockholder Elizabeth Morrison and the class are represented by Joel Friedlander, Jeffrey M. Gorris and Christopher P. Quinn of Friedlander & Gorris PA and Randall J. Barron and Christopher H. Lyons of Robbins Geller Rudman & Dowd LLP.

Ray Berry is represented by John L. Reed and Peter H. Kyle of DLA Piper (US) LLP.

JPMorgan Chase and J.P. Morgan Securities are represented by Kevin G. Abrams, J. Peter Shindel Jr. and Matthew L. Miller of Abrams & Bayliss LLP and Matthew A. Schwartz and Joshua S. Levy of Sullivan & Cromwell LLP.

Richard A. Anicetti is represented by Patricia L. Enerio of Heyman Enerio Gattuso & Hirzel LLP and Adam L. Sisitsky of Mintz Levin Cohn Ferris Glovsky and Popeo PC.

Scott Duggan is represented by William B. Chandler III, Bradley D. Sorrels and Lindsay K. Faccenda of Wilson Sonsini Goodrich & Rosati PC.

The case is Elizabeth Morrison et al. v. Ray Berry et al., case number 12808-VCG, in the Court of Chancery of the State of Delaware.

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