Recent News - Zulily Shareholders want more, More, MORE!

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Sep 24

Shirley Roberson

Zulily Shareholders want more, More, MORE!

Posted by Shirley Roberson

logo-zulily.pngUnder the current legal guidelines, a corporation’s board of directors has a fiduciary duty to, above all else, maximize shareholder value when the corporation is being sold (for a discussion on how a corporation may relax this hardline duty, see our post on social purpose corporations).

Zulily shareholders are suing the corporation and its board alleging that the corporation and board failed to satisfy this requirement in the August 17 sale of Zulily to QVC’s parent company. The plaintiffs believe they deserve more for their stock.

A very interesting element in this dispute is the volatility of Zulily’s stock in the two years leading up to the sale. A stock price that skyrockets and plummets within a short time frame makes it harder to settle on an accurate valuation (a process that is already nebulous and often likened to the “black arts”).

It will be interesting to hear the parties’ arguments about how to value corporate stock during a sale transaction as the lawsuit pans out.