JAB, Coty Board Must Face Challenge to $1.7 Billion Takeover

JAB Holding Co. affiliates and Coty Inc.'s board didn’t shield themselves from a challenge to the deal that made Coty a partial JAB subsidiary just by sitting out the final director vote, a Delaware Chancery Court judge ruled Monday.

“The abstention principle” is “not absolute and often implicates factual questions that cannot be resolved on the pleadings,” Chancellor Andre G. Bouchard wrote. “Simply abstaining from a vote” doesn’t necessarily “exonerate” directors who participated in a “key board meeting before the vote,” Bouchard said.

The lawsuit, filed by a pension fund in May 2019, targets JAB affiliates, Coty directors linked to ...