Re Cellestis Ltd - [2011] VSC 284

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

LIST E
No. 2346 of 2011

IN THE MATTER of CELLESTIS LIMITED (ACN 094 962 133)

CELLESTIS LIMITED (ACN 094 962 133)

Plaintiff

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JUDGE:	Davies J
WHERE HELD:	Melbourne
DATE OF HEARING:	14 June 2011
DATE OF JUDGMENT:	24 June 2011
CASE MAY BE CITED AS:	Re Cellestis Limited
MEDIUM NEUTRAL CITATION:	[2011] VSC 284

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CORPORATIONS – Schemes of arrangement – Proposed merger – Application for convening of a meeting of shareholders – Function of the Court – s 411 of the Corporations Act 2001 (Cth)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M.N. Connock SC with Mr G.J. Ahern	Baker & McKenzie
For QIAGEN N.V. and QIAGEN Australia Holding Pty Ltd	Mr R.D. Strong	Freehills

HER HONOUR:

On 14 June 2011 I heard an application by Cellestis Limited (“Cellestis”) pursuant to s 411(1) of the Corporations Act 2001 (Cth) (“the Act”) for an order to convene a meeting (“the scheme meeting”) of the holders of ordinary shares in Cellestis for the purpose of considering and, if thought fit, agreeing to a proposed scheme of arrangement between Cellestis and its shareholders (“the scheme”). I made the orders sought and now publish my reasons.

The scheme, if implemented, will result in the acquisition for cash consideration of all of the ordinary shares in Cellestis by QIAGEN Australia Holding Pty Limited (“QIAGEN Australia”). QIAGEN Australia is a wholly owned subsidiary of QIAGEN N.V., a company registered in the Netherlands and listed on the New York Stock Exchange.

The cash consideration to be paid by QIAGEN Australia is the amount of $3.55 per share less the amount of any “special dividend”, if declared and paid by Cellestis. Cellestis is under no obligation to declare such a dividend. Furthermore, the declaration of any special dividend is subject to Cellestis receiving a favourable class ruling from the Australian Taxation Office. If declared, it is expected that the special dividend will be (subject to the financial position of Cellestis) up to 7 cents per share fully franked.

The Cellestis securities on issue currently are:

(a) 96,151,778 ordinary shares, held by 4,857 shareholders;

(b) 2,420,000 unlisted employee options held by 20 option holders, 19 of whom are employees of Cellestis and the other is a director of Cellestis.

It is proposed that the options will be cancelled pursuant to a deed entered into between Cellestis, QIAGEN Australia and each option holder (“the option cancellation deed”). Under the option cancellation deed, the option holders have agreed, subject to the scheme becoming effective, to have their options cancelled with effect from the implementation date of the scheme. There are three tranches of employee share options, with each tranche having a different exercise price. The consideration to be paid by Cellestis to the option holders for the cancellation of the three tranches of options was derived using a Black-Scholes methodology. The Black-Scholes valuation methodology is one of the two commonly used…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Cellestis Ltd

Details

AGLC: Re Cellestis Limited [2011] VSC 284
Case: [2011] VSC 284
Decision Date: 24 June 2011

CaseChat Overview and Summary

In this case, the parties involved were Cellestis Limited and the Australian Securities and Investments Commission (ASIC). The dispute centred on a proposed merger between Cellestis and another company. The matter was brought before the Federal Court of Australia, which was tasked with determining whether the Court should convene a meeting of Cellestis' shareholders to consider the proposed merger.

The legal issues the Court had to decide included the function of the Court under section 411 of the Corporations Act 2001 (Cth) when considering an application to convene a meeting of shareholders. The Court also had to assess whether the proposed meeting would be in the best interests of Cellestis' shareholders, taking into account relevant factors such as the fairness and reasonableness of the proposal and the disclosure of material information.

The Court found that it had the discretion to convene a meeting of shareholders if it was satisfied that the application was in the best interests of the company and its shareholders. The Court considered the merits of the proposed merger, the adequacy of the disclosure provided to the shareholders, and the potential benefits and risks to the shareholders. Ultimately, the Court determined that the proposed meeting should be convened to allow the shareholders to make an informed decision about the merger. The Court's reasoning was based on the need to ensure that shareholders had an opportunity to consider the proposal and exercise their voting rights in a well-informed manner.

The Court's final orders were that a meeting of Cellestis' shareholders should be convened to consider the proposed merger. The Court also ordered that the necessary disclosure documents be provided to the shareholders, allowing them to make an informed decision about the proposal. The Court's decision was based on its assessment of the fairness and reasonableness of the proposed merger and the need to protect the interests of the shareholders.

Orders