Canada's TC energy erases $199 Million damages in Delaware appeal against Columbia takeover

Delaware's top court on Tuesday overturned a judge’s order requiring Canadian pipe-line operator TC Energy, which purchased Columbia Pipeline Group for $13 billion in 2016, to pay damages of $199.2 millions.

Columbia shareholders brought the case against TC Energy, claiming that it was responsible for lowering the takeover price from $26 to $25.50. This allowed former Columbia Chief Executive Robert Skaggs to collect large payments to change control known as golden parachute.

In May 2024 Vice-Chancellor Travis Laster, of the Delaware Chancery Court, awarded the Columbia shareholders $50 per share, which is equal to $199.2 millions.

The Delaware Supreme Court cited a ruling from December 2024 in another case, which stated that acquirers like TC Energy can be held liable for assisting a breach of fiduciary duties by a seller only if the acquired knew about it and their conduct was incorrect.

In a 100-page ruling for a five-judge panel, Justice Gary Traynor stated that "for understandable reasons" this standard had not been applied.

Traynor wrote: "The Court of Chancery didn't find that TransCanada knew about Skaggs and Smith's breach of loyalty, or that the Columbia Board failed to maintain meaningful supervision of the sale process."

TransCanada was not able to participate in the breaches on the sell-side because it did not know about them.

After business hours, lawyers for Columbia shareholders didn't immediately respond to comments. TC Energy's lawyers and TC Energy did not respond immediately to similar requests.

Skaggs & Smith settled with Columbia Shareholders for $79 Million before the trial.

In re Columbia Pipeline Group Inc. Merger Litigation. Delaware Supreme Court No. 281, 2024.

(source: Reuters)