The Santander matter involved claims arising from a Controlling Stockholder Squeeze-Out transaction in which the minority stockholders of Santander Consumer USA Holdings Inc. (“SCUSA”) alleged Breach of Fiduciary Duty by the company’s controlling stockholder, Santander Holdings USA, Inc. (“SHUSA”), a wholly owned subsidiary of Banco Santander, S.A. SCUSA was a Delaware corporation specializing in subprime vehicle lending, whose common stock traded on the New York Stock Exchange under the ticker “SC.” Before the transaction, SHUSA held approximately 80.25% of SCUSA’s common stock and was entitled to nominate a majority of the board.
In July 2021, as strong used-car demand and favorable consumer-credit conditions strengthened SCUSA’s financial results, SHUSA proposed to acquire the approximately 20% of SCUSA shares it did not already own at $39.00 per share, a 7.4% premium to the prior closing price. The proposal preceded SCUSA’s public announcement of record second-quarter earnings on July 28, 2021. SHUSA structured the acquisition as a tender offer followed by a back-end merger under 8 Del. C. § 251(h) without either a minimum tender condition or approval by a majority of the minority stockholders. The parties ultimately agreed to a purchase price of $41.50 per share, and the acquisition closed on January 31, 2022, at an implied equity value of approximately $2.5 billion.
The minority stockholders—led by The Liverpool Limited Partnership and Elliott International L.P.—first compelled production of the company’s books and records under Section 220 of the Delaware General Corporation Law, then filed a consolidated class action. They alleged that SHUSA, Banco Santander, and the SCUSA directors, including President and Chief Executive Officer Mahesh Aditya, breached their fiduciary duties by approving an unfair price through an unfair process. Plaintiffs also contended that the special committee lacked independence and was authorized only to negotiate SHUSA’s proposal rather than pursue alternatives; that the Section 251(h) structure was coercive because it lacked a minimum tender condition; and that SHUSA timed its low-premium proposal to precede the public disclosure of SCUSA's record quarterly earnings. The plaintiffs sought class-wide damages measured by the difference between the $41.50 deal price and the fair value of SCUSA’s shares.
The principal valuation issue was whether the $41.50 price reflected SCUSA’s fair value or a market price artificially depressed by the timing of SHUSA’s proposal. On behalf of plaintiffs, Professor Zmijewski, supported by Erik Himan, Pavel Nikolov, Caitlin McCarthy, and Isabel Serrano Alas, analyzed SCUSA’s unaffected trading price and evaluated the effect of the company’s record quarterly performance on its common stock value.
Before trial, the parties settled for a cash payment of $162.5 million. Following a settlement hearing on December 17, 2024, Vice Chancellor Lori W. Will approved the settlement and plan of allocation, and distributions to the settlement class were made in 2025.