The Mindbody Inc. board’s negotiation strategy in a take-private deal with Vista Equity Partners Management LLC came under scrutiny by the Delaware Chancery Court, as discussed on Wednesday before the state’s highest court. Mindbody and Vista, alongside former Mindbody CEO Richard Stollmeyer, contest the basis of the March 2023 ruling which awarded an additional $1 per share to former investors, arguing the decision was speculative and resulted in an undue “windfall.”
The ex-investors contended that the acquisition was under-priced, alleging that the board failed to negotiate robustly, thereby shortchanging them in the $1.9 billion transaction. They also argued that Stollmeyer unfairly tipped Vista, favoring their bid over other potential buyers. The March decision presumes the board might have secured a more favorable price if different negotiation tactics were employed.
Andrew Rossman of Quinn Emanuel, representing Vista and Mindbody, stated that the ruling wrongly assumed that Vista might have raised its offer had the board pushed harder. As the case traverses the appeals process, the ruling raises significant questions about fiduciary responsibilities and the strategic maneuverings in high-stakes corporate buyouts.
Read more details on this ongoing legal debate here.