Key Takeaways
- • A Delaware Chancery Court ruling has complicated hedge fund litigation tactics in the Skechers $9.4 billion take-private deal, making it harder for investors to obtain internal company documents in breach-of-fiduciary-duty cases following Delaware's 2025 corporate law overhaul.
- • Multiple hedge funds, including Verition Fund Management and Empyrean Capital Partners, are competing to lead class action lawsuits challenging the $63-per-share acquisition price by 3G Capital, arguing founders Robert and David Greenberg undervalued the company during tariff-related market turmoil in May 2025.
- • Skechers raised a settlement offer to litigating hedge funds over the disputed buyout, with approximately $1.3 billion in stock value at stake in the unresolved appraisal dispute currently in discovery.
- • Hedge funds are strategically filing appraisal lawsuits ahead of fiduciary-duty claims to circumvent document discovery restrictions, but potential conflicts of interest—particularly for Empyrean, which is involved in both the appraisal case and class action—are creating obstacles to lead plaintiff designation.
- • The ruling demonstrates a broader shift in Delaware litigation dynamics that may impact how activist investors and hedge funds pursue future M&A challenges, particularly in cases where management conflicts or valuation disputes emerge.
Summary
The Skechers $9.4 billion take-private transaction initiated by 3G Capital in May 2025 has become a flashpoint for hedge fund litigation strategy, with a recent Delaware court ruling creating new obstacles for investors seeking to challenge the deal's $63-per-share valuation. Multiple hedge funds—including Verition Fund Management and Empyrean Capital Partners—are competing to lead proposed class action lawsuits against Skechers founders Robert Greenberg and his son, who negotiated the sale amid significant U.S. tariff uncertainties. The investors argue the transaction undervalued the footwear company despite 3G's assertion that the price represented a 30% premium to the 15-day average stock price.
The litigation strategy has become more complex following Delaware's corporate law overhaul in 2025, which tightened access to internal company documents in breach-of-fiduciary-duty cases. In response, hedge fund attorneys have pivoted to filing appraisal lawsuits first—where courts determine fair company value—as a mechanism to gather discovery materials that would otherwise be restricted. This tactical approach has created two parallel Delaware Chancery Court disputes: one focusing on price fairness in the appraisal context, and another challenging management's fiduciary conduct. Some hedge funds have positioned themselves in both proceedings, amplifying their leverage while complicating the path to lead plaintiff designation.
Skechers has raised its settlement offer to the litigating hedge funds, with approximately $1.3 billion in stock value currently at stake. The appraisal dispute remains in active discovery. However, the court's recognition of potential conflicts of interest—particularly regarding Empyrean Capital's simultaneous involvement in both the appraisal case and the class action leadership—threatens to disqualify certain funds from lead plaintiff roles. This ruling illustrates how Delaware's procedural changes are reshaping hedge fund litigation tactics and may establish precedent limiting the ability of activist investors to pursue coordinated multi-front legal strategies in high-value M&A disputes.
The litigation strategy has become more complex following Delaware's corporate law overhaul in 2025, which tightened access to internal company documents in breach-of-fiduciary-duty cases. In response, hedge fund attorneys have pivoted to filing appraisal lawsuits first—where courts determine fair company value—as a mechanism to gather discovery materials that would otherwise be restricted. This tactical approach has created two parallel Delaware Chancery Court disputes: one focusing on price fairness in the appraisal context, and another challenging management's fiduciary conduct. Some hedge funds have positioned themselves in both proceedings, amplifying their leverage while complicating the path to lead plaintiff designation.
Skechers has raised its settlement offer to the litigating hedge funds, with approximately $1.3 billion in stock value currently at stake. The appraisal dispute remains in active discovery. However, the court's recognition of potential conflicts of interest—particularly regarding Empyrean Capital's simultaneous involvement in both the appraisal case and the class action leadership—threatens to disqualify certain funds from lead plaintiff roles. This ruling illustrates how Delaware's procedural changes are reshaping hedge fund litigation tactics and may establish precedent limiting the ability of activist investors to pursue coordinated multi-front legal strategies in high-value M&A disputes.
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