* Company must disclose info on fairness opinion
* Company also must disclose details on bid provisions
* Ancestry.com's Dec. 27 shareholder vote at stake
By Tom Hals
WILMINGTON, Del, Dec 17 Ancestry.com Inc
must provide more details about the $1.6 billion sale
of the genealogy website before its shareholders vote on the
acquisition by private equity firm Permira Investment Advisors,
a Delaware judge ruled on Monday.
Delaware Court of Chancery judge Leo Strine made his ruling
from the bench, saying he wanted to give Ancestry.com time to
comply and hold its Dec. 27 shareholder vote as scheduled.
Shareholders had sued to block the vote on the deal, arguing
the sale was riddled with conflicts, lacked disclosures and used
legal steps that locked out competing bids.
Strine said Ancestry.com had to disclose that its banker
initially said it would be difficult to qualify as fair the $32
per share bid by Permira.
He also ordered the Provo, Utah-based company to disclose
that a confidentiality agreement signed by the 12 parties
interested in buying Ancestry.com contained a provision that
prevented them from offering a topping bid once Permira had been
"That should allow you to get your vote or I will enjoin the
deal," said Strine.
Ancestry.com's attorney, William Savitt, of Wachtell,
Lipton, Rosen & Katz, told the court the company wanted the deal
to close before year end for tax reasons, suggesting
Ancestry.com would make the disclosures soon.
The Permira-led buyout group included Ancestry.com's Chief
Executive Tim Sullivan and Chief Financial Officer Howard
Hochhauser and Spectrum Equity, which is the largest shareholder
in the company with a 30 percent stake.
Strine said he found that the sale process had a lot of
"vibrancy and fairness to it." However, he zeroed in on two
In the lead-up to the board's approval of the deal,
Hochhauser altered internal company projections after
Ancestry.com's banker, Qatalyst Partners, had reservations about
the $32 per share bid.
Days after getting the new numbers, Qatalyst declared the
deal fair to Ancestry.com's public shareholders.
"I do think the process by which things were changed was
unusual," Strine said of Hochhauser's altered forecasts.
Strine also focused on a "Don't Ask, Don't Waive" provision
signed by bidders that prevented them from raising their bid, or
even suggesting they might raise their bid, once a winner was
Strine said he was bothered that shareholders were being
told the sale was subject to higher bids but they were not told
that the losing bidders were precluded from re-entering the
The judge did say that he found the increasingly popular
provision a useful tool to force bidders to make their best
The case was heard in Delaware where Ancestry.com is
Strine, the chief judge of the business court, has been
reluctant to block votes if it means preventing shareholders
getting the only deal available.
Earlier in the year he allowed shareholders to vote on the
$23 billion sale of El Paso to Kinder Morgan Inc,
despite finding El Paso's chief executive and company's advisor,
Goldman Sachs Group, suffered from conflicts. However, Strine
also pointed the way to damages and El Paso's shareholders ended
up getting an additional $110 million settlement after the deal
Strine said Ancestry.com's shareholders may have similar
cause to pursue damages after the deal closes.
The case is In Re: Ancestry.com Inc Shareholder Litigation,
Delaware Court of Chancery, No. 7988.