Decide sides with Ellison in Oracle shareholder go well with over NetSuite acquisition

DOVER, Del. — A Delaware decide has dominated in favor of Oracle founder Larry Ellison in a shareholder lawsuit alleging that he coerced the know-how firm’s board into paying a grossly inflated value to amass software program firm NetSuite Corp. in 2016.

Vice Chancellor Samuel Glasscock III on Friday rejected the plaintiffs’ allegation that Oracle’s acquisition was not entitled to the deference historically proven company decision-makers below Delaware’s “enterprise judgment” rule.

The shareholders argued that the $9.3 billion deal ought to be subjected to a extra rigorous “whole equity” overview as a result of Ellison was each a controlling shareholder of Oracle on the time and owned virtually 40% of shares in NetSuite, which he cofounded in 1998. The lawsuit alleges that Oracle overpaid for NetSuite by $3 billion.

Whereas noting that Ellison was “a pressure” at Oracle and a face of the corporate, Glasscock mentioned Ellison was not a controlling shareholder and didn’t attempt to affect the board’s determination to amass NetSuite. Ellison withdrew from Oracle’s consideration of the NetSuite acquisition simply earlier than the preliminary presentation to the Oracle board, and the remaining administrators arrange a particular committee to conduct negotiations, the decide famous.

“That is ample to cleanse Ellison’s battle as a director and officer standing on each side of the transaction,” Glasscock wrote.

Glasscock additionally acknowledged that, whereas it’s doable for minority stockholders to train management of “the company equipment” for their very own profit, such a state of affairs didn’t apply to Ellison, who is just not a majority shareholder of Oracle.

“The proof demonstrates that he didn’t management Oracle, and that he absented himself from the acquisition of NetSuite,” the decide wrote. “Furthermore, the administrators appointed a particular committee, and I discover that physique well-functioning and unbiased of Ellison.”

Glasscock additionally rejected the shareholders’ allegations that Ellison and Oracle CEO Safra Catz breached duties of loyalty by misinforming the particular committee and concealing materials information concerning the acquisition.

Ellison co-founded NetSuite with Evan Goldberg, a former Oracle worker, in 1998. Each Oracle and NetSuite promote software program that enables companies to automate and handle enterprise processes equivalent to accounting, threat administration and provide chain operations.