Increase in share price and change in voting rights to ensure fair review of proposal for Aramark shareholder class led by UFCW Tri-State Pension Fund

Case Abstract
Lowey Dannenberg represented a shareholder class which sued to enjoin consummation of a proposal by defendant Joseph Neubauer, Aramark’s majority stockholder and Chief Executive Officer, to take the company private at an unfair and inadequate price. After surviving Defendants' motions to dismiss and preliminary objections to the complaint, Lowey Dannenberg negotiated an increase in per share price and changes in the way votes were counted to ensure fairness at the shareholder meeting to approve the merger.

Client
Aramark shareholder class led by UFCW Tri-State Pension Fund.

Case Name
United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Pension Fund v. Joseph Neubauer and Aramark Corp., Phila. C.C.P., May Term, 2006, No. 2940.

Result
Increase in share price and change in voting rights to ensure fair review of proposal.

Case Details
Lowey Dannenberg filed a complaint on behalf of its client, the United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Pension Fund and a class of shareholders, charging that Defendant Joseph Neubauer, Chairman, CEO and controlling shareholder of Aramark Corporation, breached his fiduciary duties to Plaintiff and the putative class consisting of all public stockholders of Aramark, by initiating and timing the announcement of a proposal by him and a group of private equity investors to acquire all outstanding shares of Aramark for $32 per share, in advance of Aramark’s announcement of materially good news, in order to put a cap on the market price of Aramark shares and squeeze public shareholders out of their investments in Aramark in a merger for an inadequate and unfair price.

With typically innovative thinking, Lowey Dannenberg bypassed the traditional tract of filing a case in Delaware Chancery Court and filed an action on Aramark’s home turf in the Philadelphia County Court of Common Pleas’ Commerce Division, which has developed a reputation for prompt resolution of commercial disputes. Defendants Neubauer and Aramark moved to dismiss or stay Lowey Dannenberg’s complaint on grounds, inter alia, that the action was not ripe because Aramark’s Board of Directors had not yet agreed to a merger transaction and had appointed a Special Committee to review the terms of the buyout proposal. Following extensive briefing, the Philadelphia Court of Common Pleas denied Defendants’ motions to dismiss, and faced with a case ready to immediately move forward, Defendants began negotiations to resolve the case on the very next day after the Court’s Order.

The parties reached an agreement to settle for an increase in the price per share to be paid to Aramark public stockholders, plus material changes in the way votes would be counted, to assure procedural fairness.