Sadis & Goldberg Wins 195% Above Merger Price for Cashed-Out Orchard Stockholders
Sadis & Goldberg announces a major litigation victory in recovering 195% above the merger price for stockholders cashed-out in a going-private merger of Orchard Enterprises, Inc. (“Orchard”). As counsel for a merger arbitrage hedge fund and Co-Lead Counsel for the Class, Sadis & Goldberg obtained a $10.725 million settlement for all Orchard stockholders as of the date of a merger with controlling stockholder, Dimensional Associates. This victory highlights the significant returns that hedge funds can obtain through engaging in shareholder activism and appraisal rights litigation. Douglas Hirsch, founding member of the firm and head of the Litigation Group, stated “The result obtained in this case is another example of our firm’s expertise in the area of corporate governance disputes and complex litigation. It also illustrates how our firm can help our investment adviser clients generate alpha for their investors.”
The recovery from this litigation is exceptional in two ways: First, the 195% gross recovery above the merger price for cashed-out stockholders was greater than the fair value of Orchard stock as of merger. That is because Sadis & Goldberg was able to make a strong showing of rescissory damages, which are rarely recovered in merger litigation. Second, the settlement provided an even rarer second recovery of an additional 29% above the merger price for hedge funds that previously succeeded in an appraisal action.
Sadis & Goldberg achieved this victory by litigating this action to the brink of trial. It won partial summary judgment that there was a material misrepresentation as a matter of law in the merger proxy statement and that the entire fairness standard applied. And with trial preparation under way, the Defendants agreed to the large settlement recovery. Sam Lieberman, a Sadis & Goldberg Litigation partner, argued all of the motions in this action and the settlement fairness hearing.
If you have any questions about this case or Sadis & Goldberg’s shareholder activism and appraisal rights litigation practice, please contact Litigation Partners Sam Lieberman (212) 573-8164 or Doug Hirsch (212) 573-6670 or your regular Sadis & Goldberg contact.