Hammons Hotels Shareholder Litigation

In this recent case, Chancellor William B. Chandler III of the Delaware Chancery Court ruled that the merger consideration and other aspects of the transactions that merged John Q. Hammons Hotels (JQH) into an independent third party acquisition company were fair. Defendants claimed that, among other things, Hammons and other directors breached their fiduciary duties by negotiating a merger that conferred special benefits on Hammons, the controlling shareholder of JQH and that the price paid to public shareholders was inadequate. Professor Kenneth Lehn, now a Compass Lexecon affiliate, was retained by Alan Stone of Milbank Tweed Hadley & McCloy LLP to analyze the valuation claims in the case and testify about these issues at trial. Chancellor Chandler described the valuation evidence as a “battle of the experts” and determined that Lehn’s opinion “was far more credible and persuasive than plaintiffs’” expert.