North Carolina Business Litigation Report

Smith v. NC Motor Speedway, 1997 NCBC 5 (N.C. Super. Ct. Nov. 12, 1997)(Tennille), aff'd, 132 N.C.App. 132, 516 S.E.2d 921, disc. rev. denied, 350 N.C. 310, 534 S.E.2d 596 (1999)

A majority shareholder has no fiduciary duty to minority shareholders to "auction off" the company or otherwise obtain the highest possible value for their interests once the majority shareholder decides to sell its controlling interest or engage in a cash out merger. The duties of a shareholder are distinct from those of a director under Revlon.

Under these circumstances, the remedy of the minority shareholders is exclusive, and limited to dissent and appraisal, unless the transaction is unlawful or fraudulent.

Assuming that the test of "entire fairness" must be met, it was met where the price per share was above the range determined to be appropriate by the investment advisor to the company's special committee.

An injunction against the merger was not appropriate.

Full Opinion

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Mack Sperling
Brooks Pierce, LLP
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