FAST Acquisition Corp., a Special Purpose Acquisition Company (SPAC) supported by Ruby Tuesday Inc. founder, Sandy Beall, will have to cough up $12.5 million as a settlement amount in a recent investor litigation. This suit claimed that Beall, among others, attempted to privately secure a breakup fee of $33 million following the discontinuation of a planned merger with Fertitta Entertainment, the precursor company for Golden Nugget casinos. The resolution was sanctioned on Monday by the Delaware Court of Chancery. Read more.
This merger agreement, which was decided to be terminated in December 2021, has been mired in controversy, particularly due to the contested breakup fee. A breakup fee is often negotiated in merger agreements as a form of compensation for the potential acquirer if the target company pulls out of the deal.
The Vice Chancellor of the Delaware Court, Paul Fioravanti Jr., also approved a $2 million attorney’s fee award, coupled with almost $43,000 to be doled out as expenses. Furthermore, a $5,000 incentive award intended for the class’s lead plaintiff, Special Opportunities Fund Inc., will be allocated from the attorney’s fee award.
The conclusion of this litigation sheds light on the often complex and controversial COMPEN landscape surrounding SPACS, facilitating a more risk-mitigated framework for future special purpose acquisition endeavors.