Dolan’s MSG Networks Merger Vote Can Proceed, Judge Rules
(Bloomberg) -- MSG Networks Inc. shareholders can proceed with a vote next week on a proposed merger with Madison Square Garden Entertainment Corp. after a judge rejected an investor request to delay attempts by billionaire James Dolan to consolidate his family’s interest in the companies.
Delaware Chancery Court Judge Kathaleen McCormick on Friday ruled that MSG’s board did what was necessary to protect shareholders as part of the deal. The judge said in her ruling she moved quickly to decide the issue “given the proximity of the shareholder vote.” She heard arguments on the injunction Thursday in Wilmington.
Minority shareholders claim they aren’t getting enough for MSG shares, arguing that the merger is an insider transaction by Dolan -- owner of the National Basketball Association’s New York Knicks -- and “the result of the domination and control of the board by the Dolan Family Group.”
MSG had argued Delaware’s corporate-takeover statute doesn’t “apply -- nor was it remotely designed or intended to apply -- to the merger challenged in this litigation.” The proposed $900 million stock-for-stock combination didn’t involve the sort of “abusive takeover tactics” by a hostile acquirer that the law was meant to discourage, the company said in a court filing.
Erica Slep, an MSG spokeswoman, didn’t immediately return a call or an email for comment Friday. The company owns Madison Square Garden -- home to the Knicks and the Dolan-owned National Hockey League’s New York Rangers -- along with Radio City Music Hall and the Tao restaurant and nightclub chain.
Postponing the investor vote on the merger would only “delays its wealth-creating synergies and puts at risk the tax and financing benefits the parties hope to realize,” MSG’s lawyers argued in court papers.
Over the years, Dolan has been criticized for his handling of the Knicks’ franchise, which had one of the NBA’s worst records over the decade. This year, however, the Knicks made the playoffs for first time since 2013, led by star forward Julius Randle. They lost to the Atlanta Hawks in five games in the first round.
The case is Leisz v. MSG Networks Inc., No. 2021-0504, Delaware Chancery Court (Wilmington).
©2021 Bloomberg L.P.