On September 18, 2019, Stoll Berne attorneys Josh Ross and Lydia Anderson-Dana represented two directors of the Alpenrose Dairy businesses in a five day preliminary injunction hearing in Multnomah County Circuit Court. Stoll Berne’s clients, along with two other company directors, voted in favor of selling certain operating assets of the Dairy’s business to Smith Brothers Farms. That transaction will not impact the remainder of the property in southwest Portland and will have minimal impact on community uses.
Like Alpenrose, Smith Brothers is a century-old, family owned dairy business. The two companies have worked together on a transaction over many months, and are excited that the transaction will preserve the Alpenrose brand, expand the dairy’s market, and strengthen the ability of the two mid-sized dairies to compete in an increasingly difficult industry.
On the eve of closing, a minority group of family members, representing an indirect ownership block of just under 2%, filed suit, claiming that a non-binding proposal they previously submitted was superior and that the board was required to sell the business to them.
Evidence at the hearing showed that, in addition to the plaintiffs’ non-binding proposal, the plaintiffs had previously submitted a covert proposal to buy the business in the name of a private equity firm, without revealing their involvement. That proposal included a significantly under-valued “option” to acquire the separately-owned real estate and also showed that the plaintiffs hoped to move the business and develop the property.
At the conclusion of the five day hearing aimed at halting the sale, the Court found that the plaintiff’s competing proposal was not objectively superior and that the board’s prior negotiating history with the plaintiffs supported the board’s reasonable and objective view that Smith Brothers was the better negotiating partner. The Court denied the plaintiffs’ request to halt the sale and also dismissed the lawsuit.
On October 10, 2019, an arbitration panel in a separate pending litigation matter rejected another attempt by the plaintiffs to halt the sale.