## Facts

- Grupo México controlled Southern Peru Copper Corporation (later Southern Copper Corporation) and owned 99.15% of Minera México, a non-public mining company.
- In 2004, Grupo México proposed that Southern Peru acquire Grupo México’s 99.15% interest in Minera in an all-stock transaction valuing Minera at about $3.05 billion.
- Because the transaction was controller self-dealing, Southern Peru formed a special committee of purportedly disinterested directors and retained Goldman Sachs as financial advisor.
- After months of negotiations and financial analyses, the special committee approved the merger.
- By closing, the market value of the Southern Peru shares issued to Grupo México had risen to roughly $3.75 billion.
- A minority stockholder, suing derivatively, alleged the merger was unfair because Southern Peru paid more than Minera was worth, benefiting the controller at the corporation’s expense.

## Issues

1. Whether the merger with the controlling stockholder’s affiliate satisfied the entire fairness standard as to fair dealing and fair price.
2. Whether the special committee’s independence, authority, and process were sufficient to support a finding of fairness.
3. Whether the Court of Chancery’s damages methodology—measuring overpayment as the difference between the consideration paid and Minera’s fair value—was a proper equitable remedy.
4. Whether the Court of Chancery abused its discretion in awarding attorneys’ fees and expenses as a percentage of the common fund.
5. Whether the failure to allocate the burden of proof on entire fairness before trial required reversal.

## Decision

- The Delaware Supreme Court affirmed the post-trial judgment in full.
- The Court held the transaction was properly reviewed for entire fairness because a controlling stockholder stood on both sides of the deal.
- The Court upheld findings that the controller and controller-aligned directors breached the duty of loyalty by approving an unfairly priced transaction reached through an ineffective committee process.
- The Court sustained damages based on the difference between the value Southern Peru paid at closing (about $3.7 billion) and the court-determined fair value of Minera (about $2.4 billion), producing base damages of roughly $1.263 billion plus interest.
- The Court affirmed a common-fund attorneys’ fee and expense award exceeding $304 million (about 15% of the fund) as within the trial court’s discretion.
- The Court found no reversible error from the lack of a formal pretrial burden allocation because the trial court conducted a full entire fairness review and the result did not turn on burden placement.

## Legal Principles

- A controller self-dealing transaction is subject to entire fairness review, requiring the defendants to prove both fair dealing (process) and fair price (economic fairness).
- A special committee must function as an effective bargaining agent for the minority; process defects, including negotiations aimed at supporting the controller’s desired price rather than arm’s-length bargaining, support a finding of unfair dealing.
- In fiduciary duty cases, the Court of Chancery has broad equitable authority to award damages that approximate the corporation’s economic loss, including overpayment measured by fair value compared to consideration paid.
- Appellate review defers to the trial court’s factual findings and valuation determinations absent clear error.
- In derivative common-fund recoveries, Delaware courts may award fees as a percentage of the fund, with the size of the benefit achieved and contingent risk as central considerations.

## Conclusion

The Delaware Supreme Court affirmed liability and substantial monetary and fee awards arising from a controller-driven merger, holding that deficiencies in the special committee process and an unfair price supported a failure of entire fairness and justified overpayment damages and a percentage-of-the-fund fee award.


Americas Mining Corp. v. Theriault, 51 A.3d 1213 (Del. 2012)