In re TIBCO Software Inc. Stockholders Litigation

IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE

IN RE TIBCO SOFTWARE INC. CONSOLIDATED
STOCKHOLDERS LITIGATION C.A. No. 10319-CB

MEMORANDUM OPINION

Date Submitted: November 21, 2014
Date Decided: November 25, 2014

Stuart M. Grant and Cynthia A. Calder of GRANT & EISENHOFER, P.A., Wilmington,
Delaware; Mark Lebovitch, Richard Gluck, Edward G. Timlin, Adam Hollander and
John Vielandi of BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP, New
York, New York; Francis Bottini, Jr. of BOTTINI & BOTTINI INC., La Jolla,
California; Juan E. Monteverde and James Wilson, Jr. of FARUQI & FARUQI LLP,
New York, New York; Counsel for Lead Plaintiff.

Tamika Montgomery-Reeves and Bradley D. Sorrels of WILSON SONSINI
GOODRICH & ROSATI, PC, Wilmington, Delaware; Steven M. Schatz, David J. Berger
and Katherine L. Henderson of WILSON SONSINI GOODRICH & ROSATI, PC, Palo
Alto, California; Counsel for Defendants TIBCO Software Inc., Vivek Ranadivé, Nanci
Caldwell, Eric Dunn, Manuel A. Fernandez, Phillip Fernandez, Peter Job, David J. West
and Philip Wood.

Gregory P. Williams, Anne C. Foster and J. Scott Pritchard of RICHARDS, LAYTON &
FINGER, P.A., Wilmington, Delaware; Yosef J. Riemer, P.C., Matthew Solum, David S.
Flugman and Shireen A. Barday of KIRKLAND & ELLIS LLP, New York, New York;
Counsel for Defendants Balboa Intermediate Holdings, Balboa Merger Sub, Inc., and
Vista Equity Partners V, L.P.

Kevin G. Abrams and J. Peter Shindel, Jr. of ABRAMS & BAYLISS LLP, Wilmington,
Delaware; Paul Vizcarrondo, Jr., Carrie M. Reilly, Steven Winter and Luke M. Appling
of WACHTELL, LIPTON, ROSEN & KATZ, New York, New York; Counsel for
Defendant Goldman, Sachs & Co.

BOUCHARD, C.
I. INTRODUCTION

In this action, a stockholder of TIBCO Software Inc. (“TIBCO” or the

“Company”) challenges the per-share consideration that Vista Equity Partners V, L.P., a

private equity fund, agreed to pay in a recently announced merger (the “Merger”) in

which TIBCO stockholders currently stand to receive $24.00 in cash per share. In its

press release announcing the Merger, TIBCO stated that the transaction, at $24.00 per

share, reflected an enterprise value for the Company of approximately $4.3 billion. This

enterprise value implies an equity value of approximately $4.244 billion.

The enterprise value stated in the press release was incorrect because it was based

on inaccurate information about the number of fully diluted shares of TIBCO stock to be

acquired by Vista. A merger at $24.00 per share, based on the accurate number of fully

diluted shares, translates to an enterprise value for TIBCO of approximately $4.2 billion

and an equity value of approximately $4.144 billion—a difference of approximately $100

million, or approximately $0.58 per share, from what the Company had announced.

On October 16, 2014, TIBCO filed its preliminary proxy statement for the Merger,

which disclosed the error in the share count and that, based on the accurate share count,

the enterprise value of the transaction would be approximately $100 million lower than

what had been announced in the press release. The financial press quickly picked up on

this surprising development, prompting this lawsuit.

On October 23, 2014, the TIBCO board of directors (the “Board”) met to consider

its options after the share count error was discovered. The preliminary discovery record

shows that the Board did not know at that time how the error had occurred or whether

1
Vista had relied on the incorrect share count in making its $24.00 per share bid. The

record does reflect, however, that the Company’s financial advisor in the Merger,

Goldman, Sachs & Co. (“Goldman”), did know by that time that Vista had in fact relied

on the inaccurate share count. The Board decided not to approach Vista to seek to

modify the $24.00 per-share price stated in the merger agreement and, instead, decided to

proceed with the Merger on the terms stated in the merger agreement. The Board also

decided not to change its recommendation that TIBCO stockholders vote in favor of the

Merger.

TIBCO stockholders are set to vote on the Merger on December 3, 2014, and the

Merger is expected to close shortly thereafter. Plaintiff seeks to enjoin the stockholder

vote until the Court can decide, after an expedited trial, his claim that the per-share

consideration in the merger agreement between TIBCO and Vista should be reformed

from $24.00 to $24.58. Plaintiff also seeks a preliminary injunction based on a breach of

fiduciary duty claim against the directors of TIBCO and aiding and abetting claims

against Vista and Goldman.

Plaintiff’s fiduciary duty claim challenges the actions of the TIBCO board after

the error in the share count was discovered. Plaintiff does not challenge the sale process

that led to the execution of the merger agreement, or any of the disclosures in the proxy

statement issued in connection with the upcoming meeting of TIBCO stockholders to

vote on the Merger. Plaintiff candidly acknowledges that he has no quarrel with the

quality of the sale process but, instead, seeks only to maintain what he believes was the

result of that process—a transaction with an equity value of $4.244 billion.

2
 In this opinion, I conclude that Plaintiff has failed to demonstrate a basis for the

issuance of a preliminary injunction. Regarding Plaintiff’s claim for reformation,

Plaintiff has demonstrated a reasonable probability of proving by clear and convincing

evidence that Vista and TIBCO both operated under a mistaken assumption that the

Merger would be consummated at an aggregate equity value of $4.244 billion. Plaintiff

has failed to demonstrate, however, a reasonable probability of proving by clear and

convincing evidence—as he must to prevail on a claim of reformation under Delaware

law—that Vista and TIBCO had specifically agreed before signing the merger

agreement that the Merger would be consummated at an aggregate equity value of

$4.244 billion. Instead, the preliminary record shows that what Vista ultimately offered

and what TIBCO ultimately accepted when they negotiated the final terms of the Merger

was expressed in terms of dollars per share (i.e., $24.00 per share) and not in terms of an

aggregate equity value.

Regarding Plaintiff’s fiduciary duty-related claims, Plaintiff has failed to

demonstrate the existence of irreparable harm given that his claims concern a quantifiable

sum of money (approximately $100 million) that may be remedied by an award for

damages. In my view, moreover, the balance of the equities clearly weighs in favor of

permitting TIBCO’s stockholders to decide whether or not to approve the Merger, which

was the product of an extensive sale process and affords stockholders an opportunity to

obtain a meaningful premium for their shares.

3
II. BACKGROUND 1

A. The Parties

Defendant TIBCO, a Delaware corporation based in Palo Alto, California, is in the

enterprise software industry. TIBCO is named as a defendant “solely as a necessary

party for the Count seeking reformation of the merger agreement.” 2

Defendants Vivek Ranadivé, Nanci Caldwell, Eric Dunn, Manuel A. Fernandez,

Phil Fernandez, Peter Job, David J. West, and Philip Wood were the eight members of

the Board during the events in question. Each has been a director since at least June

2014, with three directors having joined the Board in 2014. Ranadivé is the chair of the

Board and the Company’s Chief Executive Officer. He owns more than 9 million shares

of TIBCO stock.

Defendant Vista Equity Partners V, L.P. is a fund affiliated with private equity

firm Vista Equity Partners. It formed two entities to acquire TIBCO: (i) Defendant

Balboa Intermediate Holdings, LLC, a Delaware limited liability; and (ii) its merger

1
The facts recited in this opinion are drawn from the documentary evidence and
deposition testimony submitted by the parties in conjunction with Plaintiff’s preliminary
injunction motion.

In expedited discovery in this action, Plaintiff deposed three individuals: (i) Defendant
David J. West, a TIBCO director (Pl.’s Ex. 7 (“West Dep.”)); (ii) James F. Ford, a
principal and the Chief Operating Officer of Vista Equity Partners (Pl.’s Ex. 5 (“Ford
Dep.”)); and (iii) Pawan Tewari, a Goldman managing director assigned to the TIBCO
engagement (Pl.’s Ex. 6 (“Tewari Dep.”)).
2
Am. Compl. ¶ 8.

4
subsidiary, Defendant Balboa Merger Sub, Inc., a Delaware corporation. For simplicity, I

refer to these three defendants collectively as “Vista.”

Defendant Goldman is an investment bank. It had been TIBCO’s financial advisor

before the Board initiated the sale process. In September 2014, a special committee

formed to manage the sale process hired Goldman to act as its financial advisor. For its

advisory services, Goldman stands to earn a percentage of the aggregate consideration to

be paid in the Merger. According to the proxy statement, this equates to a transaction fee

of approximately $47.4 million. 3 The Company paid Goldman $500,000 upon retainer,

and the remainder of Goldman’s fee (currently 98.9%) is contingent upon closing of the

Merger.

Plaintiff Paul Hudelson (“Plaintiff”) has been a TIBCO stockholder at all relevant

times. Plaintiff brings this lawsuit individually and on behalf of a class of all TIBCO

stockholders, excluding defendants and their affiliates, during the period from September

26, 2014, through the present.

B. The Company Receives Initial Indications of Interest in an Acquisition

During the first half of 2014, several financial sponsors (i.e., private equity firms)

contacted Ranadivé, TIBCO’s CEO, to indicate their interest in potential strategic

transactions with the Company. The suggested transactions included an acquisition and a

capital raise. At the time, the Board largely did not pursue these inquiries. 4

3
TIBCO Ex. 1 (“Proxy”) at 51.
4
Id. at 28.

5
 On June 3, 2014, TIBCO pre-announced its financial results for the second quarter

of 2014, which were lower than Wall Street estimates for the Company’s performance.

On June 6, 2014, the Board held a special meeting to discuss the Company’s financial

outlook, as well as the possibility that potential acquirers may be interested in the

Company. Representatives of Goldman attended the meeting and gave a presentation on

TIBCO’s general position in the market and its strategic alternatives. 5

On July 11, 2014, at a special meeting, the Board instructed Goldman to “engage

in a comprehensive review of the strategic alternatives available to TIBCO.” 6 On July

29, 2014, at another special meeting, the Board decided to explore a possible sale of the

Company. The Board directed that the Company contact some of the potential acquirers

who had previously expressed their interest. 7

On August 15, 2014, the Company received two preliminary, non-binding

indications of interest. One financial sponsor indicated its interest in acquiring TIBCO

for between $20.00 and $21.00 per share. The other financial sponsor (“Sponsor B”)

indicated its interest in acquiring TIBCO for between $24.00 and $25.00 per share. 8

5
Id.
6
Id. at 29.
7
Id.
8
Id. at 30.

6
 C. The Board Forms the Special Committee to Manage the Sale Process

On August 16, 2014, the Board held a special meeting with Goldman

representatives in attendance. The Board resolved (i) to engage in a further review of the

Company’s available strategic alternatives; and (ii) to form the Special Committee for

this purpose. The Special Committee was formed for the sake of efficiency to permit a

smaller group of outside directors living in the same time zone to explore these

alternatives. 9 It consisted of directors Caldwell, Dunn, and West. The Special

Committee was authorized to engage advisors and was charged with “review[ing] all

strategic alternatives available to TIBCO and . . . mak[ing] a recommendation to the

Board of Directors regarding a course of action.” 10

On August 18, 2014, the Special Committee held its first meeting. By this time,

several potential acquirers already had expressed interest in the Company. The Special

Committee engaged (i) Wilson Sonsini Goodrich & Rosati, P.C. (“Wilson Sonsini”),

which had been counsel to the Board, as its legal advisor; and (ii) Goldman as its

financial advisor. The Special Committee directed Goldman to contact a list of potential

acquirers. 11

9
West Dep. 14-15.
10
Proxy at 30.
11
Id. at 30-31. Goldman apparently already had been preparing certain materials for
TIBCO. One week before the Special Committee’s August 18 meeting, a Goldman
employee working on a TIBCO assignment was asking about the “best practice for
including restricted stock in the share count.” Pl.’s Ex. 8.

7
 Goldman’s engagement with the Special Committee was later memorialized in a

September 1, 2014, engagement letter. The engagement letter included various

disclaimers, including that Goldman would be entitled to “rely upon and assume the

accuracy and completeness of all of the financial . . . and other information provided by”

TIBCO. Goldman received a $500,000 upfront payment as a credit towards a potential

transaction fee, which is equal to a progressive percentage of the aggregate consideration

paid to acquire TIBCO, and is payable upon closing of the transaction. Goldman’s base

fee is 1% of the aggregate consideration. 12

The negotiations between the Company and potential acquirers, which now

included Vista, were generally conducted through Goldman. 13 In late August 2014, the

Special Committee instructed Goldman to inform all previously contacted parties to

submit their preliminary indications of interest by August 30, 2014.

On August 30, 2014, Vista submitted a preliminary, non-binding indication of

interest for “an all-cash transaction at $23.00 to $25.00 per share of common stock and

common stock equivalents.” 14 Vista came to this indicative range, as it would with its

subsequent bids, in part by determining the maximum price it was willing to pay based on

“the return objectives [its] looking for for [its] investors.” 15 This initial proposal, unlike

12
Pl.’s Ex. 9 at TIBCOM00000006-07.
13
West Dep. 52-53.
14
Vista Ex. 7 at VISTA0000595.
15
Ford Dep. 19.

8
Vista’s subsequent bids, included an express assumption about the approximate number

of shares of outstanding common stock and stock-based awards to be acquired. 16

On September 3, 2014, TIBCO issued a press release announcing the formation of

the Special Committee and its review of the Company’s strategic alternatives. 17

D. Goldman Provides Information about TIBCO’s Capital Structure to
the Two Highest Bidders

In August and September 2014, Goldman discussed an acquisition of the

Company with twenty-four potential acquirers: fourteen strategic buyers and ten financial

sponsors. Some of those potential acquirers were identified by TIBCO or Goldman;

others had contacted the Company in response to its announcement on September 3.18

Eventually, two serious bidders emerged: Vista and Sponsor B.

Vista and Sponsor B were the only parties that received access to TIBCO’s data

room, which the Company had established to facilitate ongoing due diligence. 19 The data

room contained certain information about the Company’s capitalization. 20 In late August

2014, these bidders sought additional information about TIBCO’s share count—

16
Vista Ex. 7 at VISTA0000595.
17
Proxy at 33.
18
Id. at 31, 33.
19
Tewari Dep. 44.
20
Id. 45-46.

9
specifically, the number of fully diluted shares that would need to be acquired in a

merger. 21

TIBCO prepared an initial spreadsheet reflecting the Company’s share count as of

August 15, 2014 (the “First Cap Table”). 22 Around August 29, 2014, after receiving

approval from the Company, 23 Goldman provided the First Cap Table to the bidders. 24

The First Cap Table did not list the number of fully diluted shares—it was up to

the bidders to compute that number. 25 Rather, the First Cap Table (i) listed the total

number of shares of common stock outstanding (163,890,919) and (ii) contained specific

line items for the number of options and award shares outstanding, which were totaled

separately. One of these line items stated that there were approximately 4.3 million

unvested restricted shares outstanding. As became known later, but could not be

determined from the face of the First Cap Table (or from subsequent versions discussed

21
Goldman Ex. 5.
22
Id. at TIBCOM00033406.
23
Goldman Ex. 7.
24
Goldman Ex. 8.
25
It appears that a fully diluted share count was not provided because that number is
partly a function of the per-share consideration. That is, as the per-share offer price
increases, the amount of proceeds to be received by the holders of in-the-money options
also increases and, thus, the number of share equivalents necessary to cover the in-the-
money value of the options increases as well. For this reason, when Goldman provided
the First Cap Table (and the subsequent cap tables described later), it also provided data
on the exercise prices of the outstanding options and stock-based awards. In this opinion,
I use “fully diluted shares” to refer to the sum of the share equivalent of the outstanding
options and other stock-based awards at the offered consideration (based on the weighted
average exercise price) plus the outstanding shares of common stock.

10
below), those 4.3 million unvested restricted shares were also included in the outstanding

common stock total. Thus, these restricted shares were, in effect, being “double counted”

as outstanding award shares and as outstanding common shares. 26 This double-counting

of unvested restricted shares is at the heart of TIBCO’s and Vista’s initial

misunderstanding about the total purchase price of the Merger.

On September 11, 2014, the Special Committee instructed Goldman to request

final proposals from the bidders by September 24, 2014. 27 In mid-September 2014, Vista

and Sponsor B requested updated share count information from Goldman. 28 TIBCO

provided to Goldman an updated spreadsheet reflecting the Company’s share count as of

September 19, 2014 (the “Second Cap Table”) and noted that TIBCO was “continu[ing]

to work through this” information. 29 The Second Cap Table contained the same error as

the First Cap Table, i.e., the unvested restricted shares (now approximately 4.2 million)

were listed on a line item as a component of the outstanding options and awards and

simultaneously were included in the total common stock outstanding (now 163,851,917

26
Goldman Ex. 5 at TIBCOM00033406.
27
Proxy at 34.
28
Goldman Ex. 10.
29
Goldman Ex. 11 at TIBCOM00045621.

11
shares) without any notation about this double-counting on the document. 30 Goldman

sent the Second Cap Table to the bidders on September 21. 31

On September 23, 2014, Sponsor B submitted a proposal to acquire TIBCO for

$21.00 per share. 32 On September 24, Vista submitted a bid that contemplated “an all-

cash transaction at $23.00 per share of common stock and common stock equivalents.” 33

Vista’s $23.00 per share bid letter did not reference any total purchase price and, unlike

its initial indication of interest, did not express any assumption about the approximate

number of shares of outstanding common stock and stock-based awards to be acquired. 34

When the Special Committee met to review the acquisition proposals, it compared them

on the basis of the consideration per share. 35

In the afternoon of September 25, 2014, Sponsor B raised its proposal to $22.50

per share. Later on September 25, Goldman requested that Vista and Sponsor B submit

their final proposals by early in the afternoon the following day. 36

On the morning of September 26, 2014, the Vista investment committee met to

discuss the maximum bid that Vista could make without needing further committee

30
Id. at TIBCOM00045625.
31
Goldman Ex. 12.
32
Proxy at 35.
33
Vista Ex. 5 at VISTA0001880.
34
Id.
35
See, e.g., TIBCO Ex. 11.
36
Proxy at 35.

12
approval. In acquiring companies, Vista focuses on “cash on cash returns”—that is, “the

equity invested, what multiple of equity [is] returned at the end of the investment.” 37 The

investment committee set the ceiling for the TIBCO auction at $24.25 per share, and the

committee authorized an offer of $24.10 per share. 38 Based on Vista’s understanding of

TIBCO’s share count from the Second Cap Table, the $24.25 per share maximum

reflected a total equity value of $4.238 billion and, including the assumption of TIBCO’s

approximately $68 million in net debt, an enterprise value of $4.305 billion. 39 According

to Plaintiff, the maximum total purchase price of $4.305 billion was equivalent to Vista’s

desired cash-on-cash return rate. 40

By midday on September 26, and before either Vista or Sponsor B submitted a

final bid, someone at TIBCO discovered that the share count information in the Second

Cap Table was incorrect. 41 Specifically, the Second Cap Table did not take into account

approximately 3.7 million shares in the Company’s Long Term Incentive Plan (“LTIP”),

and thus understated the common stock outstanding by approximately 3.6 million shares

(after subtracting approximately 100,000 LTIP shares that would be withheld for tax

37
Ford Dep. 20.
38
Id. 201-03.
39
Pl.’s Ex. 11 at VISTA0006766.
40
Tr. of Oral Arg. 23, 26.
41
Tewari Dep. 82-83.

13
purposes). TIBCO brought this issue to Goldman’s attention, and Goldman informed the

bidders that the Company was revising its share count data. 42

After hearing about this issue, Vista requested more information from Goldman

about TIBCO’s share count data. 43 Vista wanted confirmation that it had the most up-to-

date data, which are critical components in Vista’s “analysis on what the equity value of

the business is.” 44 As Vista’s Ford testified, the share count data “will, depending on the

share price, change what the equity required to buy the business is.” 45

TIBCO, with Goldman’s assistance, 46 revised the Second Cap Table to reflect the

Company’s share count as of September 25, 2014 (the “Final Cap Table”). The Final

Cap Table identified the approximately 3.6 million LTIP shares as a separate line item.

But, the Final Cap Table still failed to note that the unvested restricted shares (which now

totaled 4,147,144 shares) that were listed as a separate line item also were included in the

total amount of common stock outstanding of 163,851,917 shares (excluding the LTIP

shares). 47 Thus, the Final Cap Table contained the same double-counting error as the

First and Second Cap Tables. Other than addressing the admittedly “large change” for

42
Id.
43
Pl.’s Ex. 13.
44
Ford Dep. 65.
45
Id. 71.
46
Tewari Dep. 86-88, 90.
47
Goldman Ex. 15 at GS00040373.

14
the LTIP shares, Goldman apparently did not confirm that the share count data listed in

the Final Cap Table was accurate. 48 Goldman sent the Final Cap Table to the bidders. 49

Shortly after the Final Cap Table was provided to the bidders, TIBCO’s counsel

circulated to Goldman and Vista’s counsel a draft of a representation about the

Company’s capitalization (the “Draft Cap Rep”) to be included in the negotiated merger

agreement. 50 The Draft Cap Rep stated that there were 163,851,917 outstanding shares

of TIBCO common stock, and—unlike any of the cap tables—it expressly stated that this

total included the 4,147,144 unvested restricted shares. 51 TIBCO employees exchanged

internal emails confirming the accuracy of this aspect of the Draft Cap Rep. 52

E. Vista Relies on the Final Cap Table in Making its Final Bids

Vista incorporated the share count data from the Final Cap Table into its internal

valuation analysis. 53 Based on this updated analysis, Vista submitted an offer for “an all-

cash transaction at $23.85 per share of common stock and common stock equivalents.” 54

Using the share data in the Final Cap Table, the $23.85 per share offer translated into an

48
Tewari Dep. 92 (“Q. Did you raise any other questions with the group about the share
count? A: I – not that I recall. Q. Did anyone else on the Goldman team raise any other
questions about the share count? A. Not that I recall.”).
49
Pl.’s Ex. 13.
50
Goldman Ex. 6 at GS00035976.
51
Id. at GS00035980.
52
TIBCO Ex. 20.
53
Ford Dep. 92.
54
Goldman Ex. 16 at GS00010186.

15
implied equity value of approximately $4.217 billion. 55 This $4.217 billion figure was

approximately $21 million less than the ceiling authorized by Vista’s investment

committee earlier that day.

As with its previous bid letter, Vista’s bid letter for the $23.85 per share offer did

not refer to a total purchase price or express any assumption about the approximate

number of shares of outstanding common stock and stock-based awards to be acquired.

Vista attached to its bid letter a markup of the merger agreement. 56 This draft of the

merger agreement included the Draft Cap Rep that accurately stated that 4,147,144

unvested restricted shares were included in TIBCO’s 163,851,917 shares of outstanding

common stock. 57

Around the time of Vista’s $23.85 per share bid, Sponsor B bid $23.75 per share. 58

During the afternoon of September 26, 2014, Goldman told Vista and Sponsor B that

their bids “were not materially differentiated.” Goldman then asked the two bidders to

submit revised final proposals by that evening, and for their revised proposals to

contemplate an improved price per share and a lower termination fee. 59

55
Pl.’s Ex. 12 at VISTA0006940.
56
Goldman Ex. 16 at GS00010187.
57
Id. at GS00010352-53.
58
Proxy at 36.
59
Id.

16
 In response to Goldman’s request, several of Vista’s principals met and discussed

what to bid. Vista raised its offer from $23.85 per share to “$24.00 per share of common

stock and common stock equivalents.” 60 Vista’s Ford testified that, in coming to the

$24.00 per-share figure, the firm’s principals and the deal team “didn’t look at documents

or analyses” but instead “what [they] thought competitively would win the auction.” 61

Consistent with Vista’s past bids, Vista’s bid letter for the $24.00 per share offer did not

refer to a total purchase price or express any assumption about the approximate number

of shares of outstanding common stock and stock-based awards to be acquired.

Vista’s $24.00 per share bid, based on the Final Cap Table, implied an aggregate

equity value of $4.244 billion and an enterprise value of $4.31 billion. Plaintiff notes that

this enterprise value was only modestly higher than the $4.305 billion ceiling set earlier

that day by Vista’s investment committee (when Vista was relying on the Second Cap

Table). The equivalent enterprise value, according to Plaintiff, would have required

Vista to bid “an awkward $23.97 per share.” 62 Based on the accurate number of fully

diluted shares, an enterprise value of $4.31 billion and an aggregate equity value of

$4.244 billion would have translated to a per-share value of $24.58, according to

Plaintiff.63

60
Vista Ex. 3 at VISTA0003025.
61
Ford Dep. 88, 95.
62
Pl.’s Br. 14.
63
Pl.’s Ex. 31 at Ex. B. $24.00 per share × 176,817,153 shares = $4,243,611,672
aggregate equity value. $4,243,611,672 aggregate equity value ÷ 172,670,009 shares =

17
 Ford testified that Vista’s $24.00 per share bid represented the “highest price per

share” that Vista was willing to pay. 64 Vista also offered to reduce the termination fee in

the draft merger agreement to 2.75% and to maintain the limited guaranty at 6.5%. 65

Both the termination fee and the limited guaranty were being negotiated as a percentage

of the implied equity value of the transaction.

In contrast to Vista, Sponsor B declined to increase its last offer of $23.75 per

share. It also declined the offer to have additional time to consider improving its bid. 66

Late in the evening of September 26, Vista learned from Goldman that its $24.00

per share bid was in the lead. Vista’s and TIBCO’s counsel then worked to finalize the

merger agreement that they had been negotiating.

Around this time, Vista decided to change how it would finance the acquisition.

Specifically, Vista changed its funding from a combination of cash and debt to be all

cash. 67 A few minutes after midnight on September 27, and before the merger agreement

was signed, Vista submitted a revised draft of its Equity Commitment Letter to TIBCO.

$24.576 per share. Plaintiff refers to this figure as both $24.57 and $24.58. In this
opinion, I use the rounded up figure of $24.58 per share.
64
Ford Dep. 96.
65
Pl.’s Ex. 17; Tewari Dep. 145-46. The limited guaranty is a cap on Vista’s monetary
liability for any breaches of the Merger Agreement or any incorporated agreements.
66
Proxy at 36.
67
West Dep. 88-89.

18
The Equity Commitment Letter reflected Vista’s commitment to fund “an aggregate

amount up to $4,859,000,000” to acquire TIBCO. 68

Attached to the Equity Commitment Letter was a spreadsheet “showing the

calculations used to arrive at the amount of the commitment.” 69 This spreadsheet

contemplated that Vista would pay $24.00 per share to acquire 176,817,153 fully diluted

shares for a total purchase price of $4,243,611,662. 70 The total number of fully diluted

shares was calculated based on the Final Cap Table and, thus, double-counted the number

of unvested restricted shares. 71

Vista’s Ford testified that the approximately $4.244 billion reflected in the Equity

Commitment Letter spreadsheet was “the equity value that we expected we were paying

for the business.” 72 Although no presentation to Vista’s investment committee had

specifically reflected a calculation of $24.00 per share times the number of fully diluted

shares in the Final Cap Table, the $4.244 billion figure was “consistent” with Vista’s

“expectation” as to the equity price that it was agreeing to pay to acquire TIBCO. 73

68
Pl.’s Ex. 21 at GS00011528 (emphasis added).
69
Id. at GS00011526.
70
Id. at GS00011572.
71
Pl.’s Ex. 28 at VISTA0004329.
72
Ford Dep. 128.
73
Id. 136.

19
 F. TIBCO Accepts Vista’s Offer

On September 27, 2014, the Special Committee and the Board met concurrently

during a telephonic meeting to review the acquisition proposals. The meeting began at

approximately 5:00 a.m. (California time). 74 Representatives of Goldman were in

attendance and reviewed the financial terms of the competing proposals with the Board. 75

The minutes reflect that the Board compared the two proposals on a per-share basis:

Vista at $24.00 per share and Sponsor B at $23.75 per share. 76 Wilson Sonsini and

Goldman then reviewed the terms of Vista’s offer.

Goldman’s presentation on the fairness of Vista’s final offer was based on the

inaccurate share count data from the Final Cap Table. Specifically, Goldman had

calculated that, at $24.00 per share, and assuming (incorrectly) that there were

approximately 176.8 million fully diluted shares, Vista’s offer implied an equity value of

approximately $4.244 billion and an enterprise value of approximately $4.311 billion.77

Goldman’s fairness presentation also noted that Vista’s offer of $24.00 per share

represented a 26.3% premium over the trading price of TIBCO stock ($19.00) on

September 23, the last trading day prior to news reports about a potential transaction. 78

74
West Dep. 43.
75
Vista Ex. 4.
76
Id. at TIBCOM00000464.
77
Pl.’s Ex. 18 at TIBCOM00000348, 358.
78
TIBCO Ex. 26 at GS00000022.

20
 TIBCO’s West testified that his focus during Goldman’s presentation was on the

$24.00 per share figure, 79 but he also acknowledged that he understood that the $4.311

billion implied enterprise value and the $4.244 billion implied equity value—which were

listed in various places in the board book 80—reflected $24.00 per share times the

assumed share count. 81 That is, he understood the math that Vista’s offer equaled an

enterprise value of $4.311 billion. 82

At the end of its presentation, Goldman gave its opinion that $24.00 per share was

fair, from a financial point of view, to TIBCO stockholders. 83 Based on its evaluation of

Vista’s offer, the Special Committee unanimously voted in favor of the Merger. The

Board then unanimously approved the Merger based, in part, on its “belief that the $24.00

cash per share is the best price reasonably attainable for stockholders.” 84 There is no

reference to any discussion of any total purchase price in the minutes of the September 27

Board meeting. The Board further resolved to recommend that TIBCO stockholders

approve the Merger. 85

79
West Dep. 45-49.
80
Pl.’s Ex. 18 at TIBCOM00000348, 358.
81
West Dep. 46, 49-50.
82
Id. 54-55.
83
Goldman Ex. 20 at GS00000014-16.
84
Vista Ex. 4 at TIBCOM00000466.
85
Id. at TIBCOM00000467.

21
 G. Key Terms of the Merger Agreement

Later on September 27, 2014, TIBCO and Vista executed the Agreement and Plan

of Merger (the “Merger Agreement”), which is governed by Delaware law. 86 The Merger

Agreement did not list a total purchase price or an implied equity value. 87 Instead, the

Merger Agreement specifically provided that, at the effective time of the Merger, each

share of TIBCO common stock will be “automatically converted into the right to receive

cash in an amount equal to $24.00, without interest.” 88

The Merger Agreement included a capitalization representation (the “Cap Rep”)

that had been updated from the earlier Draft Cap Rep. The Cap Rep stated that there

were 163,851,917 outstanding common shares of TIBCO common stock, a figure that

expressly included the 4,147,144 unvested restricted shares. 89 The Merger Agreement

also accurately listed the other outstanding options and stock-based awards. The Merger

Agreement thus accurately provided the share count data needed for Vista to calculate

that, based on the $24.00 per share price, it would need to acquire 172,670,009 fully

86
Vista Ex. 1 § 9.9.
87
As Plaintiff’s counsel acknowledged, this is typical in an agreement for the acquisition
of a public company. Pl.’s Br. 7.
88
Merger Agreement § 2.7(a)(ii).
89
Id. § 3.7(a)-(b).

22
diluted shares in the Merger (not the 176,817,153 fully diluted shares that had been

contemplated in the Equity Commitment Letter spreadsheet). 90

The Merger Agreement provides a termination right to Vista in the event that the

Cap Rep is inaccurate at closing and that any inaccuracies, individually or in the

aggregate, would require Vista to pay more than $10 million above the product of $24.00

per share multiplied by the number of fully diluted shares derived from the Cap Rep. 91

This $10 million “cap ceiling” reflects the reality that, for a public company, the share

count may change between signing and closing. For example, during this period, options

or other stock-based compensation may be granted to newly hired employees or forfeited

by terminated employees. 92

Certain terms of the Merger Agreement were negotiated by TIBCO and Vista as a

percentage of the assumed equity value of $4.244 billion. For example, the final

termination fee was negotiated as 2.75% of the assumed $4.244 billion equity value, 93

90
There were 4,641,716 outstanding options at a weighted average exercise price of
$13.41. At an offer price of $24.00 per share, the share equivalent of these options is
2,282,165 shares. There were also 2,934,638 shares in other unvested stock-based
awards and 3,601,289 LTIP shares (after subtracting shares withheld for tax purposes).
Thus, the total number of fully diluted options and awards at an offer price of $24.00
equated to 8,818,092 (2,282,165 + 2,934,638 + 3,601,289 = 8,818,092). When added to
the total number of outstanding common shares, this yields a fully diluted number of
shares of 172,670,009 (163,851,917 + 8,818,092 = 172,670,009).
91
Id. §§ 7.2(a)(iii), 8.1(e).
92
Ford Dep. 59.
93
Tewari Dep. 145-46; Pl.’s Ex. 17.

23
which is represented in the Merger Agreement as $116.7 million. 94 Similarly, TIBCO’s

limited guaranty to Vista under the Merger Agreement also was negotiated as “a percent

figure applied to the transaction value.” 95 The $275.8 million limited guaranty96

represents 6.5% of the $4.244 billion implied equity value.

The Merger Agreement contains a “drop dead” date of March 27, 2015, after

which Vista can terminate the agreement if the Merger has not closed. 97

H. TIBCO, Vista, and Goldman Make Statements that the Merger Implies
a $4.3 Billion Enterprise Value

On September 29, 2014, TIBCO issued a press release announcing the Merger.

The press release stated, in relevant part:

Under the terms of the agreement, TIBCO stockholders will receive $24.00
per share in cash, or a total of approximately $4.3 billion, including the
assumption of net debt. . . . The total enterprise value of the transaction
represents more than 18 times TIBCO’s earnings before interest,
depreciation and amortization (EBITDA) for the 12 months ending August
31, 2014. 98

Representatives of Vista and Goldman reviewed the release before it was issued. 99 The

Board relied on Goldman to calculate the implied enterprise value, which, along with the

18x EBITDA multiple, was based on the incorrect share data from the Final Cap Table.

94
Merger Agreement § 8.3(b).
95
Tewari Dep. 141.
96
Merger Agreement § 8.3(f)(i).
97
Id. § 8.1(c).
98
Pl.’s Ex. 1.
99
Tewari Dep. 109; Ford Dep. 137-38.

24
TIBCO, Vista, and Goldman all generally assumed that the enterprise value of the

Merger was approximately $4.3 billion. 100

After signing the Merger Agreement, Vista made several statements reflecting its

expectation that it would need to pay approximately $4.3 billion to acquire TIBCO. For

example, in October 2014, Vista prepared presentations to give to several ratings

agencies in its efforts to obtain debt financing for the Merger. Drafts of these

presentations, including those dated October 9 and 14, stated that Vista was to acquire

TIBCO “for $4.3b.” 101 Only after Vista learned of the error in the Final Cap Table did it

revise the ratings agency presentation “to reflect what is now a $4.2b transaction.” 102

Goldman likewise thought that the implied enterprise value of the Merger was

$4.3 billion. It prepared an internal “case study” on the Merger for its investment

banking division to use for marketing purposes. The case study calculated the implied

equity value as $4.244 billion, based on the incorrect Final Cap Table, and it reflected

that the Merger implied an enterprise value for TIBCO of approximately $4.3 billion. 103

I. The Error in the Final Cap Table is Discovered

On Sunday, October 5, 2014, TIBCO’s counsel circulated a draft of the proxy

statement for a special meeting of TIBCO’s stockholders to vote on the Merger. Upon

100
West Dep. 79-80; Ford Dep. 139-40; Tewari Dep. 115.
101
Pl.’s Ex. 25 at TIBCOM00023128; Pl.’s Ex. 27 at VISTA0000156.
102
Pl.’s Ex. 29.
103
Pl.’s Ex. 22.

25
reviewing the draft, a Goldman employee commented in an email that “[t]he aggregate

value calculation doesn’t look right” 104 compared to the number that had been used in

Goldman’s analysis. 105 Just over an hour after receiving the draft, Goldman emailed

Wilson Sonsini to discuss, in light of the data in the Final Cap Table, whether the “equity

value and aggregate value should come out to a different number.” 106 The record does

not reflect that anyone had identified this error before Goldman raised it on October 5. 107

After a series of conversations between TIBCO and Goldman, the magnitude of

the error eventually was discovered—i.e., the Final Cap Table, and everything based on

the information in that document, had caused the number of fully diluted shares to be

overstated by double-counting the 4,147,144 unvested restricted shares. The decrease in

the number of the fully diluted shares, at the $24.00 per share offer, had the effect of

reducing the total implied equity consideration by about $100 million, from

approximately $4.244 billion to approximately $4.144 billion. 108

104
Pl.’s Ex. 24.
105
Tewari Dep. 153.
106
Goldman Ex. 21 at GS00039162.
107
Goldman contends that it would have been “nearly impossible” for anyone to have
discovered the error based on TIBCO’s public filings, not only because those earlier
public numbers were stale, but also because “the missing LTIP shares, which were
roughly equal to the restricted shares, masked the double-counted restricted shares.”
Goldman’s Br. 9 n.4.
108
4,147,144 × $24.00 = $99,531,456.

26
 J. The Board Meets to Discuss What to Do

On October 11, 2014, after the Board was informed of the error, the Board

convened a special meeting to review the situation. Representatives of Goldman attended

this meeting. The minutes reflect the manner in which Goldman “described” the “error”

in its initial fairness opinion presentation:

The representatives of Goldman Sachs described for the Board an error
related to the amount of shares outstanding that was contained in Goldman
Sachs’ fairness opinion presentation delivered to the Board on September
27, 2014. Referring to materials previously provided to the Board, the
representatives of Goldman Sachs then reviewed with the Board the impact
on each of the amounts as a result of this error and what the amount should
have been had the correct outstanding share number been used. The Board
discussed this matter with the representatives of Goldman Sachs. 109

Defendant West did not recall that Goldman specifically explained that the error would

lead to an approximately $100 million reduction in the amount expected to be paid to

TIBCO stockholders for their equity in the Company. 110 But, Goldman’s presentation

book for this meeting did specifically note the key economic terms in the transaction that

had changed due to the corrected share count. 111 For example, the implied enterprise

value decreased to $4.212 billion, and the last twelve month EBITDA multiple decreased

to 17.6x. After a discussion with the Board, Goldman confirmed that these adjustments

did not change its opinion that the $24.00 per share offered in the Merger was still fair,

109
Pl.’s Ex. 26 at TIBCOM00000566.
110
West Dep. 103.
111
TIBCO Ex. 34 at TIBCOM00000376, 385-86.

27
from a financial point of view, to TIBCO’s stockholders, even at the lower total equity

consideration of $4.144 billion. 112

After Goldman concluded its presentation, the Board met in executive session

along with members of the Company’s management and representatives of Wilson

Sonsini to discuss the issues raised by Goldman. According to the minutes, the Board

ultimately “concluded that the revised analysis presented by Goldman Sachs at the

meeting did not impact the Board’s recommendation that stockholders adopt the merger

agreement.” 113

Outside of this October 11 Board meeting, the preliminary record suggests a lack

of effective communication between Goldman and the Board about the overstated share

count in the Final Cap Table. According to the deposition testimony of Goldman’s

Pawan Tewari, no member of the Board asked Goldman: (a) how the overstated share

count error was made; (b) if the error was Goldman’s fault or the Company’s fault; (c)

whether Goldman had discussed the overstated share count with Vista; or (d) whether

Vista should or would pay $4.244 billion in equity consideration in the Merger. 114

On October 15, 2014, a Vista representative informed Goldman that, in fact, Vista

had relied on the information presented in the Final Cap Table “for the calculation of

112
Pl.’s Ex. 26 at TIBCOM00000566.
113
Id. at TIBCOM00000567.
114
Tewari Dep. 167-69.

28
equity value” in its final $24.00 per share offer. 115 According to the testimony of

TIBCO’s West, Goldman did not inform the Board that Vista had admitted to using the

incorrect share count data in the Final Cap Table when Vista valued TIBCO’s equity and

submitted its $24.00 per share bid. 116 Nor did Goldman ever provide him, or, to his

knowledge, anyone else on the Board, a written explanation as to how the error had

occurred. 117

Vista’s team, for its part, claims it had mixed emotions after it learned of the share

count error and, soon thereafter, that the error cut in its favor. Ford testified that one of

his reactions was “pleasure because, you know, we were potentially buying the company

for less than we had expected at that point in time.” 118

K. The Overstated Share Count Error Becomes Public

On October 16, 2014, TIBCO filed its preliminary proxy statement for the Merger.

The preliminary proxy disclosed information about the overstated share count in the

“Background of the Merger” section. It also disclosed that, based on the accurate share

115
Pl.’s Ex. 28.
116
West Dep. 133-34. At oral argument, Goldman represented that its counsel for the
TIBCO engagement told the Board’s counsel about this critical information the same day
Goldman learned about it. Tr. of Oral Arg. 130-31. There is nothing in the record to
support this assertion. TIBCO and the Board vehemently disagree. They assert that
Goldman did not bring this information to the Board’s attention and that the Board did
not become aware of it until discovery in this litigation. Id. 76.
117
West Dep. 147-48.
118
Ford Dep. 172. He was also “curious” about how this error could have happened, and
he also felt “a little frustration” in knowing that shareholder litigation about the
overstated share count would likely occur. Id. 172-73.

29
count, the $24.00 per share consideration implied an enterprise value of approximately

$4.2 billion, or approximately $100 million less than the $4.3 billion that the Company

initially announced. 119 The financial press also quickly picked up on this issue,

prompting this lawsuit. 120

L. The Board’s Response to the Overstated Share Count

On October 23, 2014, the Board held a telephonic meeting. A contingent of

Wilson Sonsini attorneys dialed in to the call, but Goldman’s representatives did not

attend. In addition to discussing matters related to the proxy statement, the Board

considered what, if anything, TIBCO should do in light of the overstated share count

issue. 121

At this time, according to director West, “[t]here wasn’t certainty about how the

error had occurred.” 122 Additionally, as reflected in the minutes, “it was still unknown if

either Vista or Sponsor B used an incorrect share count in arriving at their per share bids”

119
See TIBCO Software Inc., Preliminary Proxy Statement (Schedule 14/A), at 37-38
(Oct. 16, 2014).
120
See, e.g., David Gelles, An Oops for Goldman Sachs in Its Advice on Vista-Tibco
Merger, N.Y. TIMES: DEALBOOK, (Oct. 17, 2014, 12:36 PM),
http://dealbook.nytimes.com/2014/10/17/an-oops-for-goldman-sachs-in-its-advice-on-
vista-tibco-merger/; Gillian Tan, Spreadsheet Mistake Costs Tibco Shareholders $100
Million, WALL ST. J.: MONEYBEAT, (Oct. 16, 2014, 7:01 PM),
http://blogs.wsj.com/moneybeat/2014/10/16/spreadsheet-mistake-costs-tibco-
shareholders-100-million/.
121
Pl.’s Ex. 30.
122
West Dep. 122.

30
submitted on September 26. 123 That is, the record reflects that the Board still had not

been made aware of the information Goldman had learned over one week earlier, on

October 15, that Vista had relied on the Final Cap Table in formulating its $24.00 per

share bid or how the error had come about. 124

According to the minutes, the Board weighed four courses of action: (i) seek to

renegotiate the per-share purchase price with Vista; (ii) pursue the matter further with

Goldman; (iii) reconsider its recommendation in favor of the Merger; or (iv) proceed with

the Merger. Ultimately, the Board decided to proceed with the Merger on the terms set

forth in the Merger Agreement.

The Board decided not to ask if Vista would be willing to pay an aggregate

purchase price of $4.244 billion ($24.58 per share times the accurate fully diluted share

count). According to the minutes, although the Board acknowledged that the termination

fee and limited guaranty terms of the Merger Agreement were negotiated based on the

implied equity value derived from the $24.00 per share consideration, the Board did not

believe that the Merger Agreement provided “a basis for the Company to force Vista to

increase the per share price paid to stockholders or otherwise change the agreement.” 125

West testified about the Board’s evaluation of this option, as follows:

123
Pl.’s Ex. 30 at TIBCOM00047691 (emphasis added).
124
West Dep. 123 (“But it was uncertain whether – uncertain, you know, whether or not
Vista or [Sponsor B] had bid on a per-share basis, on an enterprise value basis. We were
unsure, and at that point we had – you know, we had to decide what to do with that
information.”).
125
Pl.’s Ex. 30 at TIBCOM00047690.

31
 We had a number of options available to us. One of them was to go
back to Vista and – again, with context, not really knowing what Vista
and/or [Sponsor B] may or may not have done in terms of negotiation and
not knowing what Goldman Sachs said, which is kind of where we were,
there was a capitalization table in the merger agreement that was correct in
terms of the number of shares; then there was apparently a spreadsheet that
may have been passed back and forth. It was unclear to us who used what
data, and so at that point – that’s the starting point for us.

Based on that, you could speculate that maybe we could have gotten
more money. Maybe we would – might have at the time; we don’t know.
So one of the options, too, is just to go back and try to get more money
from Vista. We had the opportunity to do that, but based on the way the
merger agreement was written, we essentially would have had to almost
start over again. There was nothing that would compel them to do it. That
was one option we talked about. 126

The Board ultimately never approached Vista. 127

During the October 23 Board meeting, Wilson Sonsini reminded the TIBCO

directors of their fiduciary duties in the sale of control context to, in language evoking

Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 128 “seek the best price reasonably

obtainable for stockholders.” 129 At the end of the meeting, the Board members each

“expressed [his or her] belief that the negotiations had been focused on a per share price.”

Each further stated his or her belief that “$24.00 per share appeared to be the highest

price achievable at the time of the negotiation.” 130 Thus, the Board decided to proceed

126
West Dep. 126-27.
127
Id. 118.
128
506 A.2d 173 (Del. 1986).
129
Pl.’s Ex. 30 at TIBCOM00047690.
130
Id. at TIBCOM00047691.

32
with the Merger for the consideration set forth in the Merger Agreement: $24.00 per

share, for an aggregate equity value of $4.144 billion.

On October 29, 2014, the Company scheduled a special meeting for stockholders

to vote on the Merger for December 3, 2014.

M. Procedural History

On October 6, 2014, the first of seven putative class action lawsuits challenging

the Merger was filed in this Court. On November 5, 2014, Plaintiff filed his initial

complaint. On November 8, 2014, I granted Plaintiff’s motion for consolidation and lead

counsel and his motion for expedited proceedings.

On November 12, 2014, Plaintiff moved for a preliminary injunction of the

TIBCO stockholder vote that is currently scheduled for December 3, 2014. On

November 16, 2014, Plaintiff amended his complaint. On November 21, 2014, I heard

oral argument on Plaintiff’s motion for a preliminary injunction.

III. LEGAL ANALYSIS

Plaintiff’s motion for a preliminary injunction seeks to enjoin the vote of TIBCO

stockholders on the Merger scheduled for December 3, 2014, “until a trial is held and a

decision [is] rendered on [Plaintiff’s] claim for the reformation of the merger agreement.”

Specifically, Plaintiff seeks to reform the Merger Agreement to provide for TIBCO

stockholders to receive $24.58 per share, rather than the current $24.00 per share.

Alternatively, although it was not evident from Plaintiff’s motion, he seeks to enjoin the

stockholder meeting based on an alleged breach of fiduciary duty concerning the Board’s

actions after it learned that the proposed Merger would not yield an equity value of

33
$4.244 billion. 131 Thus, I consider below whether either the reformation or fiduciary duty

claims provide a basis for entry of a preliminary injunction. I conclude that they do not.

A. Legal Standard

To obtain a preliminary injunction, Plaintiff must establish three elements: (i) a

reasonable probability of success on the merits; (ii) irreparable harm absent interim relief;

and (iii) that the balance of the equities favors the relief requested. 132 “This burden is not

a light one, and an ‘extraordinary remedy’ like a preliminary injunction ‘will never be

granted unless earned.’” 133 Although “[a] strong showing on one element may overcome

a weak showing on another element,” Plaintiff must still demonstrate all three

elements. 134

B. Plaintiff Has Not Demonstrated a Reasonable Probability of Success on
His Claim for Reformation of the Merger Agreement

Reformation “is an equitable remedy which emanates from the maxim that equity

treats that as done which ought to have been done.” 135 The Court of Chancery has

equitable jurisdiction to reform the terms of a written contract “in order to express the

131
See Tr. of Oral Argument 134-35.
132
See Revlon, Inc. v. MacAndrews & Forbes Hldgs., Inc., 506 A.2d 173, 179 (Del.
1986).
133
Wayne Cty. Empls.’ Ret. Sys. v. Corti, 954 A.2d 319, 329 (Del. Ch. 2008) (quoting
Lenahan v. Nat’l Computer Analysts Corp., 310 A.2d 661, 664 (Del. Ch. 1973)).
134
See Cantor Fitzgerald, L.P. v. Cantor, 724 A.2d 571, 579 (Del. Ch. 1998).
135
Interim Healthcare, Inc. v. Sherion Corp., 2003 WL 22902879, at *6 (Del. Ch. Nov.
19, 2003, revised Dec. 1, 2003) (quoting 27 Williston on Contracts § 70:19 (4th ed.
2003)).

34
‘real agreement’ of the parties involved.” 136 Reformation is not an equitable license for

the Court to write a new contract at the invitation of a party who is unsatisfied with his or

her side of the bargain; rather, it permits the Court to reform a written contract that was

intended to memorialize, but fails to comport with, the parties’ prior agreement. 137 As

Professor Williston explains:

It is not enough that the parties would have come to a certain agreement
had they been aware of the actual facts.

Reformation requires an antecedent agreement, which the written
instrument attempts to express. However, any mistake must have been in
the drafting of the instrument, not in the making of the contract. An
instrument will not be reformed due to a mere misunderstanding of the
facts, or a mistake as to an extrinsic fact which, if known, would probably
have induced the making of a different contract or no contract at all. If
there has been any misunderstanding between the parties, or a
misapprehension by one or both, so that there is no mutuality of assent,
then the parties have not made a contract, and neither will the court do so
for them. 138

136
Cerberus Int’l, Ltd. v. Apollo Mgmt., L.P., 794 A.2d 1141, 1151 (Del. 2002) (quoting
Colvocoresses v. W.S. Wasserman Co., 28 A.2d 588, 589 (Del. Ch. 1942)).
137
See Collins v. Burke, 418 A.2d 999, 1002-03 (Del. 1980) (“Reformation is not a
mandate to produce a reasonable result . . . . Rather, it is based on intention.”); see also
In re Estate of Justison, 2005 WL 217035, at *10 (Del. Ch. Jan. 21, 2005) (“The purpose
of reformation is to make an erroneous instrument express correctly the intent of, or the
real agreement between, the parties.”).
138
27 Williston on Contracts § 70:19, quoted in Interim Healthcare, 2003 WL 22902879,
at *7; see also Waggoner v. Laster, 581 A.2d 1127, 1135 (Del. 1990) (quoting 3
Pomeroy’s Equity Jurisprudence, § 870 (5th ed.)) (“Reformation is appropriate, when an
agreement has been made . . . as intended by all the parties interested, but in reducing
such agreement or transaction to writing, . . . through the mistake common to both
parties, . . . the written instrument fails to express the real agreement or transaction.”).

35
 A claim for reformation must be proven by clear and convincing evidence. 139 As

the Delaware Supreme Court stated in Cerberus International, Ltd. v. Apollo

Management, L.P., the leading case on reformation under Delaware law, “the plaintiff

must show by clear and convincing evidence that the parties came to a specific prior

understanding that differed materially from the written agreement.” 140 The clear and

convincing evidence standard has been described as requiring “evidence which produces

in the mind of the trier of fact an abiding conviction that the truth of [the] factual

contentions are ‘highly probable.’” 141 This heightened requirement enables the Court to

compare the prior agreement and the executed contract in order to determine “exactly

what terms” need to be reformed. 142 It also “preserve[s] the integrity of written

agreements by making it difficult” to modify executed contracts. 143

Plaintiff contends that Vista and TIBCO specifically agreed to a transaction at

$4.244 billion in aggregate equity value. He argues that Vista decided to offer $24.00 per

139
Cerberus, 794 A.2d at 1152.
140
Id. at 1151-52.
141
Id. at 1151 (quoting In re Rowe, 566 A.2d 1001, 1003 (Del. Jud. 1989)).
142
See Collins, 418 A.2d at 1002 (emphasis added); see also Hob Tea Room v. Miller, 89
A.2d 851, 857 (1952) (“Unless there was a clear understanding with which the formal
contract conflicts, there is, of course, no comparative standard upon which to base a
reformation, and the contract as executed must stand.”).
143
See Joyce v. RCN Corp., 2003 WL 21517864, at *3 (Del. Ch. July 1, 2003); cf. ev3,
Inc. v. Lesh, -- A.3d --, 2014 WL 4914905, at *2 n.3 (Del. Sept. 30, 2014) (“Delaware
courts seek to ensure freedom of contract and promote clarity in the law in order to
facilitate commerce.”).

36
share based on the implied equity value of $4.244 billion, contending that it “defies

logic” for a sophisticated financial sponsor like Vista to “not calculate what [its] total

expenditure in a transaction will be before agreeing to it.” 144 Likewise, Plaintiff

maintains that the Board viewed Vista’s final bid, based on Goldman’s fairness

presentation, as an offer of $4.244 billion in aggregate equity value. Plaintiff submits

that Vista’s Equity Commitment Letter, Goldman’s fairness presentation, the negotiation

of the termination fee and limited guaranty provisions, and TIBCO’s September 29 press

release is sufficient evidence to support a finding of a reasonable probability of proving

that the parties understood, and thereby agreed, that the Merger would be at an aggregate

equity value of $4.244 billion. 145 Thus, Plaintiff requests that the Court reform Section

2.7(a)(ii) of the Merger Agreement to provide for each TIBCO stockholder to receive

$24.58 per share instead of $24.00 per share.

In opposition, Vista 146 contends that the only agreement between Vista and

TIBCO on the economic terms of the Merger that can be supported by the record is what

is ultimately reflected in the Merger Agreement: that TIBCO’s stockholders would

receive $24.00 per share. In particular, Vista emphasizes that its final offer on September

26 and the Board’s acceptance of that offer on September 27 both contemplated a

144
Pl.’s Br. 31.
145
Id. 26-29.
146
Vista argued against Plaintiff’s reformation claim on behalf of all defendants against
whom Plaintiff seeks reformation.

37
transaction at $24.00 per share, without any reference to, and thus without any agreement

on, what the aggregate equity value would be. 147

Vista further argues that the parties’ mistaken assumption “as to how contractual

terms will operate in practice”—here, Vista’s and TIBCO’s references to the Merger

being for an aggregate equity value of $4.244 billion—“cannot supplant the actual

agreement that is reached between the parties as memorialized in a contract.”148

According to Vista, because “none of [Plaintiff’s] documents state that Vista and TIBCO

agreed to anything other than a $24.00 per share purchase price,” and because the Merger

Agreement accurately reflects that $24.00 per share agreement, there was no meeting of

the minds on any specific term that is not accurately reflected in the Merger

Agreement. 149

To evaluate the parties’ competing contentions, I use the analytical framework that

the Supreme Court employed to analyze the reformation claim at issue in Cerberus.

There, a financial sponsor (Apollo) acquired a target company (MTI) pursuant to a

merger agreement that set forth a formula reflecting the total consideration that MTI

stockholders would receive: $65 million, less transaction costs, and less proceeds from

147
Vista’s Br. 26-27.
148
Id. 28.
149
Id. 36. Vista also challenges Plaintiff’s standing to assert a reformation claim based
on a disclaimer of third-party beneficiary rights in the Merger Agreement and on the
theory that the claim is derivative in nature and thus cannot be asserted by Plaintiff as a
direct claim. Id. 11-15. Because I conclude that Plaintiff has not demonstrated a
reasonable probability of success on the merits of the claim, I do not address these issues.

38
the sale of certain options and warrants. After the transaction closed, the plaintiffs filed

suit and alleged that the executed contract contained a drafting error that warranted

reformation because Apollo and MTI actually had agreed to a different purchase price:

$65 million, less transaction fees, plus the proceeds from the sale of the options and

warrants. According to the Supreme Court, the plaintiffs would need to prove three facts

(each by clear and convincing evidence) to justify reformation of the purchase price

under the doctrine of mutual mistake: “(i) MTI thought that the merger agreement gave

MTI’s stockholders the proceeds of the options and warrants; (ii) . . . Apollo was also

similarly mistaken . . .; and (iii) that MTI and Apollo had specifically agreed that the

proceeds of the options and warrants would go to MTI’s stockholders.” 150

Applying the analytical framework used in Cerberus to this case, Plaintiff could

recover on his reformation claim only if he were to establish three facts at trial: (i) Vista

thought that the Merger would be consummated at an aggregate equity value of $4.244

billion; (ii) TIBCO also thought that the Merger would be consummated at an aggregate

equity value of $4.244 billion; and (iii) Vista and TIBCO had specifically agreed that the

Merger would be consummated at an aggregate equity value of $4.244 billion. Because

Plaintiff ultimately would have to establish each element by clear and convincing

evidence, it is necessary to consider that evidentiary standard in the context of Plaintiff’s

preliminary injunction motion. 151 Thus, Plaintiff must show a reasonable probability of

150
Cerberus, 794 A.2d at 1152 (emphasis added).
151
See Cirrus Hldg. Co. Ltd. v. Cirrus Indus., Inc., 794 A.2d 1191, 1201-02 (Del. Ch.
2001) (considering the clear and convincing evidence standard in the context of the

39
success that he could prove each of the three elements of his reformation claim by clear

and convincing evidence. As discussed below, I conclude that Plaintiff has satisfied this

standard for the first two elements, but not for the third element.

1. Did Vista Believe the Merger Would Be Consummated at an
Aggregate Equity Value of $4.244 Billion?

In my opinion, Plaintiff has a reasonable probability of establishing by clear and

convincing evidence that Vista thought it would pay $4.244 billion in aggregate equity

value to acquire the outstanding stock of TIBCO. The presentation book used when the

Vista investment committee met on September 26 and approved a maximum bid of

$24.25 per share (based on the Second Cap Table) reflects that Vista clearly was

cognizant of the relationship between a per-share bid and the total purchase price implied

by that bid. It also is reasonable to infer from Vista’s request for Goldman to confirm the

accuracy of the Final Cap Table mere hours before it made its $23.85 per share bid on

September 26, that Vista needed to know the share count to determine the aggregate

equity value it would pay in making a per-share bid. Vista’s final $24.00 per share bid,

based on the Final Cap Table, is functionally equivalent to the earlier total purchase price

ceiling set by its investment committee. And, at the same time that Vista was considering

the aggregate equity value when submitting its final $24.00 per share bid, it offered to

plaintiff’s preliminary injunction motion where the plaintiff’s underlying claim for
specific performance was subject to that evidentiary standard); cf. Cerberus, 794 A.2d at
1149 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254 (1986)) (holding that a
trial court should apply the substantive burden of proof at the summary judgment stage).

40
decrease the termination fee to 2.75% of that equity value, which equated to $116.7

million.

The spreadsheet accompanying the Equity Commitment Letter, which was

provided to TIBCO only hours before the Board met to evaluate the Merger Agreement

and which explicitly equates the $24.00 per share price to an equity value of $4.244

billion, further provides strong evidence that Vista anticipated paying approximately

$4.244 billion to acquire the equity of TIBCO. This conclusion is consistent with the

reference to an approximate enterprise value of $4.3 billion not only in the September 29

press release announcing the transaction, which Vista reviewed, but also in the early

drafts of Vista’s ratings agency presentations for debt financing.

Although Ford testified that Vista was considering other factors beyond the total

purchase price when it submitted its final bid for $24.00 per share, 152 his testimony also

supports the conclusion that Vista expected to pay $4.244 billion for TIBCO’s equity.

For example, when Vista eventually learned about the mistake in the Final Cap Table,

and thus that it would only have to pay $4.144 billion for TIBCO’s equity, Ford felt

“pleasure”—because Vista was “potentially buying the company for less than [it] had

expected.” 153

152
Ford Dep. 95.
153
Id. 172.

41
 On the whole, Plaintiff has shown in my view a reasonable probability that he

could prove, by clear and convincing evidence, that Vista mistakenly believed it would

pay $4.244 billion in total to acquire the equity of TIBCO in the Merger.

2. Did TIBCO Believe the Merger Would Be Consummated at an
Aggregate Equity Value of $4.244 Billion?

Similarly strong evidence, in my view, demonstrates a reasonable probability of

success for Plaintiff to prove by clear and convincing evidence that the Board mistakenly

thought that TIBCO was agreeing to a transaction in which TIBCO stockholders would

receive $4.244 billion in aggregate equity value. The Special Committee’s request on

September 26 for the remaining two bidders to improve their offers by decreasing the

termination fee of the merger agreement, which was being negotiated as a percentage of

aggregate equity value, reflects that these directors were aware of the total value of the

proposals, particularly for Vista’s final $24.00 per share offer. Likewise, during the

Board’s review of the terms of Vista’s final offer on September 27, Goldman noted on

several slides of its presentation that the $24.00 per share consideration equaled an

aggregate equity value of $4.244 billion and an enterprise value of $4.3 billion.154

Finally, after adopting the Merger Agreement, the Board approved the September 29

press release reflecting that the $24.00 per share in consideration plus the assumption of

net debt implied a $4.3 billion enterprise value—and thus a $4.244 billion equity value.

This preliminary record is sufficient for me to conclude that Plaintiff has a

reasonable probability of success in establishing, by clear and convincing evidence, that

154
Pl.’s Ex. 18 at TIBCOM00000348, 358.

42
TIBCO mistakenly believed that Vista would pay $4.244 billion in total to acquire the

equity of TIBCO in the Merger.

3. Before Signing the Merger Agreement, Had Vista and TIBCO
Specifically Agreed that the Merger Would Be Consummated at
an Aggregate Equity Value of $4.244 Billion?

Despite the evidence reflecting that Vista and TIBCO both mistakenly believed

before signing the Merger Agreement that Vista would pay $4.244 billion in total to

acquire the equity of TIBCO, Plaintiff has not, in my opinion, demonstrated a reasonable

probability that he could prove by clear and convincing evidence that Vista and TIBCO

had specifically agreed that the Merger would be at an aggregate equity value of $4.244

billion. In other words, Plaintiff has not shown a reasonable probability of proving, by

clear and convincing evidence, that the Merger Agreement does not accurately reflect the

parties’ meeting of the minds on the essential economic term of the Merger: a deal at

$24.00 per share.

To the contrary, key evidence from September 26 and 27 strongly demonstrates

that what Vista ultimately offered and what TIBCO ultimately accepted was expressed in

terms of dollars per share and not in terms of an aggregate equity value. The three

documents that evidence their agreement to a transaction based on a per-share price are

(1) Vista’s September 26 bid letter conveying the $24.00 per share offer, 155 (2) the

September 27 minutes reflecting the Board’s acceptance of the $24.00 per share offer,156

155
Vista Ex. 3.
156
Vista Ex. 4.

43
and (3) the Merger Agreement Vista and TIBCO executed on September 27, which sets

forth the consideration to be received by TIBCO stockholders as $24.00 per share. 157 All

of these documents reflect an agreement to a transaction based on a per-share figure, and

not based on an aggregate equity value. This per-share agreement is consistent with the

way in which Goldman, on behalf of TIBCO, was conducting the auction: on a per-share

basis. Based on the preliminary record, at no point in time did Vista offer a specific

aggregate equity value, and at no point in time did the Board accept a specific aggregate

equity value. 158

Instead, the sale process reflects that Vista and TIBCO understood that the number

of fully diluted shares to be acquired in a transaction, and thus the aggregate equity value,

was a bit of a moving target. For example, the fact that Goldman had circulated different

cap tables for the Company on August 29, 159 on September 21, 160 and on September

26, 161 demonstrates that Vista and TIBCO understood that, until there was a definitive

agreement, the number of fully diluted shares was changing, even if only modestly.

Indeed, the Merger Agreement reflects that the parties recognized that the number of

157
Merger Agreement § 2.7(a)(ii).
158
Nor at any time during the negotiations did Vista offer, or TIBCO accept, a per share
offer of $24.58 per share—the amount to which Plaintiff asks the Court to reform Section
2.7(a)(ii) of the Merger Agreement.
159
Goldman Ex. 8.
160
Goldman Ex. 12.
161
Pl.’s Ex. 13.

44
fully diluted shares might further change between signing and closing. Specifically, the

Merger Agreement affords Vista a termination right if any inaccuracies in the Cap Rep at

closing would increase Vista’s total acquisition cost (calculated pursuant to the terms of

the Merger Agreement) by more than $10 million.

Notably, the Merger Agreement does not provide that the consideration of $24.00

per share would change in proportion to any increase in the share count after signing.

Thus, it is difficult to see how Vista and TIBCO could be said to have specifically agreed

to a fixed aggregate equity value of $4.244 billion, as Plaintiff claims, when they agreed

in the Merger Agreement that the aggregate equity value could change.

Vista argues that, rather than specifically agreeing on an aggregate equity value,

Vista and TIBCO agreed to allocate the risk of the Merger’s aggregate equity value

through the representations and warranties, closing conditions, and termination rights set

forth in the Merger Agreement. 162 I agree. “Merger contracts are heavily negotiated and

cover a large number of specific risks explicitly.” 163 Contractual representations and

warranties “serve [this] important risk allocation function.” 164 Here, through the Cap Rep

and Vista’s corresponding termination right, the parties did just that in the Merger

162
Vista’s Br. 28-30.
163
In re IBP, Inc. S’holders Litig., 789 A.2d 14, 68 (Del. Ch. 2001).
164
Cobalt Operating, LLC v. James Crystal Enters., LLC, 2007 WL 2142926, at *28
(Del. Ch. July 20, 2007), aff’d, 945 A.2d 594 (Del. 2008).

45
Agreement with respect to the aggregate equity value in the Merger. TIBCO also

disclosed this concept to its stockholders in the proxy statement. 165

Against this evidence, Plaintiff relies on Goldman’s September 27 fairness

presentation, Vista’s Equity Commitment Letter, and TIBCO’s September 29 press

release, which Vista approved. In my opinion, although these three documents appear to

reflect a shared misunderstanding on the aggregate equity value for the Merger, they do

not support the existence of a specific, prior agreement on that aggregate equity value—

and they fall well short of the type of persuasive evidence necessary to prove this element

of a reformation claim by clear and convincing evidence. The Equity Commitment Letter

and the accompanying spreadsheet are not compelling evidence of either an offer by

Vista, or an acceptance by TIBCO, to consummate a transaction at an aggregate equity

value of $4.244 billion. By its terms, the Equity Commitment Letter was not a

commitment to pay an aggregate amount, but rather a commitment to pay up to an

aggregate amount. Goldman’s presentation is also not compelling evidence of a specific,

prior agreement for at least two reasons: there is no evidence that Vista or TIBCO

prepared that document, or that it was intended for a purpose other than for Goldman’s

opinion on the fairness of the Merger consideration. The September 29 press release

announcing the Merger, furthermore, was drafted after the parties approved the Merger

Agreement and, thus, is not strong evidence of a specific, prior agreement.

165
Proxy at 72 (“[T]he representations and warranties may have been included in the
merger agreement for the purpose of allocating contractual risks between TIBCO, Parent
and Merger Sub rather than to establish matters as facts[.]”).

46
 Finally, the fact that the parties negotiated the termination fee and the limited

guaranty in the Merger Agreement as a percentage of the assumed $4.244 billion equity

value (derived from the $24.00 per share consideration and the Final Cap Table) does not

outweigh, in my view, the strong evidence showing that the $24.00 per share figure in the

Merger Agreement accurately reflects what Vista offered and what TIBCO accepted. 166

In sum, on the preliminary record before me, Plaintiff has failed to show a

reasonable probability that he could prove, by clear and convincing evidence, that there

was a specific agreement between Vista and TIBCO for $4.244 billion in aggregate

equity value. The Merger Agreement accurately reflects, on this record, the meeting of

the minds on the essential economic term of the Merger: $24.00 per share. Plaintiff has

therefore failed to demonstrate a probability of success on his claim for reformation. For

this reason, his motion for a preliminary injunction based on the reformation claim is

denied.

C. Plaintiff’s Fiduciary Duty-Related Claims Do Not Provide a Basis for
Preliminary Injunctive Relief

1. The Parties’ Contentions

Plaintiff argues that, independent of the reformation claim, a preliminary

injunction should be issued based on his breach of fiduciary claim against the Board and

his aiding and abetting claims against Goldman and Vista. These claims do not challenge

166
Perhaps Plaintiff would have a reasonable probability of success in establishing by
clear and convincing evidence that the termination fee and limited guaranty provisions of
the Merger Agreement should be reformed, but that request was not the subject of his
preliminary injunction application and was expressly disclaimed by counsel at oral
argument. Tr. of Oral Arg. 9-10.

47
any actions taken during the sale process before the Merger Agreement was signed, or

any of the disclosures in the proxy statement that was issued in connection with the

scheduled meeting for TIBCO’s stockholders to vote on the Merger. Rather, these claims

focus on events occurring after the error in the share count was discovered.

Specifically, Plaintiff contends that the Board breached its duty of care by failing

“to adequately inform itself about the nature [and/or] circumstances surrounding the

share count problem.” 167 Plaintiff cites to the fact that at its October 23 meeting, the

Board was still unaware of how the error occurred and “did not inquire whether Vista had

relied upon the [Final Cap Table] in making its final bid.” 168 Plaintiff argues that had the

Board done so, and thereby become aware that Vista did rely on the incorrect share count

when it prepared its bid, “the Board would have known its leverage with Vista to

preserve the $100 million.” 169

Plaintiff also contends that the Board breached its fiduciary duties under Revlon by

failing “to act reasonably in the circumstances to secure the highest price available.” 170

To that end, Plaintiff cites to the Board’s failure to request “that Vista amend the Merger

Agreement to reflect the parties’ original agreement” and its decision not to seek to

167
Pl.’s Br. 34-35.
168
Id. 36.
169
Id.
170
Id.

48
recover damages from Goldman for its allegedly “grossly negligent acts.” 171 Plaintiff

further contends that Vista and Goldman knowingly participated in the Board’s breaches

of fiduciary duty.

The form of injunctive relief Plaintiff seeks based on his fiduciary duty claim was

not explained in his moving papers. At oral argument, Plaintiff’s counsel suggested that

a vote on the transaction be enjoined until the Board satisfies its fiduciary duties—i.e.,

until the Board seeks recourse to recover the $100 million in lost equity value from Vista

and/or Goldman. 172 Plaintiff argues, furthermore, that TIBCO stockholders will suffer

irreparable harm if an injunction is not issued because “injunctive and equitable relief

may well be all that is available to the stockholders given the exculpatory effect of 8 Del.

C. § 102(b)(7) for monetary damages for a breach of the duty of care.” 173 Relatedly,

Plaintiff argues that the balance of the equities tilts in his favor because TIBCO

stockholders will suffer “the loss, or risk of loss, of their right to obtain the additional

$100 million in merger consideration” while “Defendants will suffer no hardship other

than delaying the stockholder vote on the [Merger].” 174

In opposition, the Board emphasizes that Plaintiff “does not challenge . . . the

independence and disinterestedness of the Board or otherwise allege that the directors

171
Id. 37-40.
172
Tr. of Oral Arg. 139.
173
Pl.’s Br. 47.
174
Id. 48-49.

49
were incentivized to achieve anything other than the highest price for TIBCO’s

stockholders.” 175 The Board submits that it conducted a thorough process that included

contacting twenty-four potential bidders, and achieved an attractive premium, particularly

in light of TIBCO’s recent earnings results.

Focusing on the time period relevant to Plaintiff’s fiduciary duty claim, the Board

argues that the record reflects that it acted reasonably: it consulted with its legal counsel,

Wilson Sonsini, “thoroughly discussed the potential options available,” 176 and “weighed

the risk of doing anything that might be perceived as re-opening the deal with Vista

against the risk of losing the terms of the current Merger Agreement at $24.00 per share”

before voting to proceed with the existing Merger Agreement. 177 Thus, according to

TIBCO, the deliberative process the Board undertook after learning of the share count

error and its subsequent decision to proceed with the Merger at $24.00 per share was a

reasonable course of conduct under Revlon.

Finally, the Board contends that “[P]laintiff’s claims unquestionably seek

monetary relief that can be remedied . . . through damages post-closing” 178 and that the

175
TIBCO’s Br. 36-37. The Board consisted of eight members, seven of whom were
outside directors. TIBCO’s CEO, Ranadivé, holds more than 9 million shares of TIBCO
stock and thus would stand to receive more than $4.5 million in additional consideration
if the per share price was increased by $.58 per share.
176
The Board did not waive privilege concerning these discussions. Thus, the
preliminary record available to the Court was further limited concerning the thoroughness
of the Board’s decision-making after the share count error was discovered.
177
TIBCO’s Br. 42-49.
178
Id. 50.

50
balance of the equities tilts against issuance of an injunction. “[D]elaying the vote even

for a matter of weeks approaching the end of the fiscal year will require that the

Company announce its revenue and earnings figures,” which, according to the Board,

presents a risk to TIBCO stockholders because the Company “already failed to meet Wall

Street expectations in the prior two quarters of 2014.” 179

2. Plaintiff Has Failed to Demonstrate the Existence of Irreparable
Harm or that the Balance of the Equities Tilts in His Favor

As an initial matter, the form of preliminary injunction Plaintiff seeks based on his

fiduciary duty-related claims, which was articulated on the fly during oral argument, is

vague and impracticable. Plaintiff’s suggestion that the stockholder vote be enjoined

until the Board seeks recourse to recover the $100 million in lost equity value from Vista

and Goldman amounts to an open-ended injunction of potentially indefinite duration that,

from my perspective, would be impossible to implement effectively.

Putting aside the impracticability of the remedy sought, I conclude for the reasons

discussed below that a preliminary injunction based on Plaintiff’s fiduciary duty-related

claims is not warranted for lack of a showing of irreparable harm and because the balance

of the equities weighs in favor of permitting TIBCO’s stockholders to vote on the

proposed Merger. Given this conclusion, it is not necessary that I engage in a

probabilistic assessment of the merits of Plaintiff’s fiduciary duty and aiding and abetting

claims, and I decline to do so from the limited record before the Court. There are,

however, two troubling aspects of the record that bear mention.

179
Id. 55-56.

51
 First, as should be obvious, precision is critical in a conducting a corporate sale

process. In this case, the process appears to have been flawed, in my opinion, because

bids were presented to the Board and considered on a per-share basis without anyone

simultaneously confirming the share count assumptions underlying those bids. 180 As

discussed above, this lack of precision led to an apparent misunderstanding by the Board

concerning the equity value derived from Vista’s final bid. Although no contention is

made that the highest bidder did not win the auction in this case, the failure to verify the

assumptions underlying a bid and to ensure that bids are presented with complete

information on an apples-to-apples basis could lead to a different outcome in the future

and/or deprive stockholders of a target company of maximum value for their shares.

Directors of Delaware corporations may, of course, retain and rely on skilled advisors to

solicit, review and analyze bids. 181 Such advisors, like the ones here, often are richly

compensated to perform these functions. In this case, however, a significant open

question lingers concerning the basic competence with which the mechanics of the bid

process were handled.

Second, and more to the point of Plaintiff’s fiduciary duty-related claims, serious

issues have been raised concerning the quality of the information that was provided to the

180
See, e.g., VISTA Ex. 4 at TIBCOM00000464.
181
See, e.g., 8 Del. C. § 141(e).

52
Board after the share count error was discovered. 182 The preliminary record shows that,

as of October 23, when the Board met to consider its options, there remained uncertainty

about how the error had occurred and whether Vista had relied on an incorrect share

count when submitting its final bid. 183 Yet, identifying the source of the error would

seem to be a matter within TIBCO’s control that should have been determined promptly.

More troubling, the record shows that Goldman was aware a full eight days earlier (on

October 15) that Vista, in fact, had relied on the Final Cap Table in making its final

bid, 184 yet this information apparently was not provided to the Board. 185 Had this critical

information been presented to the Board, it may have made a different calculation than it

did in considering its options to maximize value for TIBCO’s stockholders. 186 The

resolution of this issue, however, must await the development of a more robust factual

record.

Separate from the possible merits of Plaintiff’s fiduciary duty-related claims, I

conclude that a preliminary injunction is not warranted because Plaintiff has plainly

182
See, e.g., Paramount Commc’ns Inc. v. QVC Network Inc., 637 A.2d 34, 45 (Del.
1994) (“[Under Revlon,] [t]he directors have the burden of proving that they were
adequately informed and acted reasonably.”).
183
See, e.g., Pl.’s Ex. 30 at TIBCOM00047691; West Dep. 123.
184
See, e.g., Pl.’s Ex. 28.
185
See, e.g., Pl.’s Ex. 28.
186
For example, armed with the knowledge that Vista made its final bid based on the
Final Cap Table and thought that it would pay $4.244 billion to acquire the equity of
TIBCO, the Board may have changed its recommendation that stockholders vote in favor
of the Merger, if permitted under the Merger Agreement, to put pressure on Vista.

53
failed to establish the existence of irreparable harm or that the balance of the equities

weighs in favor of denying TIBCO’s stockholders the opportunity to vote on the

proposed Merger.

“An injunction, being the ‘strong arm of equity,’ should never be granted except in

a clear case of irreparable injury, and with full conviction on the part of the court of its

urgent necessity.” 187 To demonstrate irreparable harm, a plaintiff must show harm “of

such a nature that no fair and reasonable redress may be had in a court of law and must

show that to refuse the injunction would be a denial of justice.” 188 Thus, a “harm that can

be remedied by money damages is not irreparable.” 189

Here, Plaintiff’s fiduciary duty-related claims concern a definable sum of money:

approximately $100 million. Based on Plaintiff’s theory of the case, at least on the

record before me, the potential harm is circumscribed by this amount. Even if the Board

is later able to demonstrate that its members are exculpated from any monetary liability

pursuant to a Section 102(b)(7) provision in TIBCO’s charter, that potential affirmative

defense does not change the fact that the damages alleged by Plaintiff are quantifiable.

Although “the one-two punch of exculpation under Section 102(b)(7) and the full

187
Gimbel v. Signal Cos., Inc., 316 A.2d 599, 602 (Del. Ch. 1974), aff’d, 316 A.2d 619
(Del. 1974).
188
Aquilla, Inc. v. Quanta Servs., Inc., 805 A.2d 196, 208 (Del. Ch. 2002) (internal
quotation marks omitted).
189
In re Delphi Fin. Gp. S’holder Litig., 2012 WL 729232, at *18 (Del. Ch. Mar. 6,
2012) (citing Gradient OC Master, Ltd. v. NBC Universal, Inc., 930 A.2d 104, 131 (Del.
Ch. 2007)).

54
protection under Section 141(e)” may limit (but does not eliminate) the prospects for

recovery against the members of the Board, 190 those statutory protections do not apply to

aiders and abettors of breaches of fiduciary duties, including the duty of care. 191

This is not a case in which an injunction is required to rectify, before the

transaction closes, the irreparable harm to stockholders of a tainted sale process. The

Court is not being asked to intervene and prevent the proverbial eggs from being

scrambled in order to open the door to a superior proposal from a third party who was not

given a reasonable opportunity to bid on TIBCO because of an unreasonable sale process.

Thus, Plaintiff’s significant reliance on the Court’s analysis in In re Del Monte Foods Co.

Shareholders Litigation is misplaced.

In Del Monte, the Court enjoined a stockholder vote on a proposed transaction for

a period of twenty days during which certain deal protection devices would not apply in

order to remedy (to the extent practicable) the taint on a sale process, particularly the

post-signing go-shop process, caused by the conflicts of interest of the board’s financial

advisor. 192 Here, by contrast, no contention is made that the deal process was tainted by

self-interest or that the highest bidder did not win the auction. Indeed, Plaintiff candidly

acknowledged that “the bidding leading to the $4.3 billion deal announcement appears to

190
See In re Del Monte Foods Co. S’holders Litig., 25 A.3d 813, 818 (Del. Ch. 2011).
191
In re Rural Metro Corp. S’holders Litig., 88 A.3d 54, 99-103 (Del. Ch. 2014) (finding
the board’s financial advisor liable for monetary damages for aiding and abetting the
directors’ breach of the duty of care).
192
See Del Monte, 25 A.3d at 842-43.

55
have been public and free from improper taint.” 193 The alleged harm to Plaintiff—not

from the pre-signing sale process as a whole but instead from the Board’s post-signing

decision to not seek to obtain an additional $100 million in consideration from Vista—is

not irreparable, in my opinion. 194

Finally, in my view, the balance of the equities clearly weighs against enjoining

the upcoming stockholder vote. As noted, Plaintiff has no quarrel with the quality of the

process that resulted in the proposed Merger, and no bidder has emerged with a topping

offer since the Merger Agreement (reflecting a price of $24.00 per share) was signed and

disclosed publicly almost two months ago. Although the share count error colors the sale

process here, the existence of that error and the Board’s response to its discovery has

been disclosed to TIBCO’s stockholders. Thus, in my opinion, delaying for some

indefinite period the opportunity for TIBCO’s stockholders to vote on the Merger on

193
Pl.’s Br. 34.
194
Plaintiff cites two other cases for the proposition that the existence of exculpation
under Section 102(b)(7) counsels in favor of granting injunctive relief: Lyondell
Chemical Co. v. Ryan, 970 A.2d 235 (Del. 2009), and Police & Fire Retirement System
of City of Detroit v. Bernal, 2009 WL 1873144 (Del. Ch. June 26, 2009). Both are
inapposite. In Lyondell, the Delaware Supreme Court simply acknowledged that a
Section 102(b)(7) provision can foreclose the possibility of post-closing damages for a
breach of the fiduciary duty of care. See Lyondell, 970 A.2d at 239. In Bernal, the Court,
in the context of granting a motion for expedited proceedings, observed that “injunctive
relief may be the only relief reasonably available to shareholders for certain breaches of
fiduciary duty in connection with a sale of control transaction, particularly where the
company has adopted a provision exculpating its directors from personal liability for
monetary damages for breaches of the duty of care.” Bernal, 2009 WL 1873144, at *3.
It does not follow from either of these cases that the mere existence of a Section
102(b)(7) provision threatens irreparable harm to stockholders because the Court may
conclude that a board breached only its duty of care.

56
December 3, would harm TIBCO’s stockholders by unnecessarily delaying them from

receiving $24.00 per share if they decide to approve the Merger. This, along with the fact

that the alleged harm to TIBCO’s stockholders is readily quantifiable, persuades me that

the balance of the equities does not favor entry of a preliminary injunction and that

TIBCO’s stockholders should have “the chance to decide for themselves about the

Merger.” 195

IV. CONCLUSION

For the foregoing reasons, Plaintiff’s motion for a preliminary injunction is

denied.

IT IS SO ORDERED.

195
In re El Paso Corp. S’holder Litig., 41 A.3d 432, 452 (Del. Ch. 2012).

57