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After Persuading Controllers to Relinquish Special Benefits in GCI-Liberty Merger, KTMC Obtains $110 million Settlement for Former GCI Stockholders

On October 5, 2021, Vice Chancellor Glasscock of the Delaware Court of Chancery approved a $110 million settlement against John Malone and other former members of GCI Liberty Inc.’s board of directors in a case involving a challenge to the telecom holding company’s merger with its affiliate, Liberty Broadband Corp.  The outstanding result was in addition to substantial equitable relief obtained via the parties’ November 21, 2020 settlement of plaintiffs’ suit to preliminarily enjoin the merger.

On behalf of plaintiff Sheet Metal Workers’ Local Union No. 80 Pension Trust Fund, KTMC had brought a class action alleging that Malone and CEO Greg Maffei used their super-voting shares to opportunistically merge the companies in an all-stock deal at a time when the exchange ratio was tilted in their favor due to market volatility created during the Covid-19 pandemic.  After weeks of expedited discovery, the defendants issued new disclosures and drastically altered the previously announced terms of the deal by agreeing to convert the super-voting shares into shares of one-vote common stock, so that Malone and Maffei would no longer obtain special treatment resulting in outsized control of the post-merger company.  Subsequently, plaintiffs amended their complaint and successfully pursued monetary relief to correct for the unfair merger price that resulted from Malone’s previously undisclosed, improper leveraging of his control position.

KTMC counsel were Eric Zagar, Matthew Benedict, and Daniel Baker.