Court of Chancery Issues Rare Pre-Discovery Dismissal of Entire Fairness Claim
In February, in an offshoot of the dwindling SPAC boom, the Delaware Court of Chancery dismissed a shareholder derivative lawsuit in In re Skillsoft Stockholders Litigation, No. 2023-1179-JTL (Feb. 7, 2025). Notably, Vice Chancellor J. Travis Laster dismissed the case even though it evaluated the transaction under the demanding entire fairness standard. The court recently denied […]
Deepa Chari is an Associate and Ian M. Ross is a Partner at Sidley Austin LLP. This post is based on their Sidley memorandum, and is part of the Delaware law series; links to other posts in the series are available here.
In February, in an offshoot of the dwindling SPAC boom, the Delaware Court of Chancery dismissed a shareholder derivative lawsuit in In re Skillsoft Stockholders Litigation, No. 2023-1179-JTL (Feb. 7, 2025). Notably, Vice Chancellor J. Travis Laster dismissed the case even though it evaluated the transaction under the demanding entire fairness standard. The court recently denied the plaintiffs’ motion for reargument, briefly noting that it “did not misapprehend any issue of fact or law.” In re Skillsoft Stockholders Litigation, No. 2023-1179-JTL (Mar. 27, 2025).
Education technology company Skillsoft went public via a de-SPAC merger in June 2021. One investor, Prosus N.V., was a key player in the deal: Prosus invested $500 million in the merger, giving it a 38.4% stake in Skillsoft.
Several months later, in November 2021, Skillsoft bought Codecademy, a programming training platform. Prosus had invested in Codecademy earlier that year, in February, and owned a 24% share.
When Skillsoft’s stock price decreased after the acquisition, stockholders brought a derivative action. They alleged that Prosus, as a major stockholder, influenced the Skillsoft board into rubber-stamping the acquisition of Codecademy at an inflated price. They claimed the price paid for Codecademy was greater than the valuation at which Prosus had invested earlier that year, despite an alleged downturn in Codecademy’s prospects in the interim.
