Delaware Court Applies Entire Fairness Standard But Dismisses Challenge

Sidley reports that in February 2025, the Delaware Court of Chancery dismissed a shareholder derivative action, In re Skillsoft Stockholders Litigation, challenging Skillsoft’s acquisition, despite applying the stringent “entire fairness standard” of review.

Vice Chancellor J. Travis Laster found that although the plaintiffs plausibly alleged that Prosus N.V. was a controlling stockholder, which triggered the entire fairness standard, the complaint failed to support a reasonable inference of unfairness in price.

The court reaffirmed its decision in March 2025, denying plaintiffs’ motion for reargument.

Skillsoft went public via a de-SPAC merger in June 2021, with Prosus taking a 38.4% stake after a $500 million investment. Several months later, Skillsoft acquired Codecademy, in which Prosus had separately acquired a 24% interest earlier that year.

After Skillsoft’s stock price dropped post-acquisition, stockholders brought a derivative suit alleging that Prosus used its influence to cause Skillsoft to overpay for Codecademy. The plaintiffs argued the board was dominated by Prosus and breached its fiduciary duties.

The court agreed that the plaintiffs had sufficiently pleaded demand futility and that the entire fairness standard applied because Prosus was plausibly a controlling shareholder.

However, the court emphasized that entire fairness includes both fair dealing and fair price. Although procedural fairness was lacking, the court found the pricing fair: Prosus had a larger economic stake in Skillsoft (37.5%) than Codecademy (24%), indicating its interests aligned with Skillsoft.

That alignment, the court held, negated any inference of unfair price.

For lawyers, this decision demonstrates that even under an entire fairness review, complaints lacking factual support for pricing unfairness may not survive a motion to dismiss in Delaware.

It also clarifies Delaware’s evolving view on control: a minority holder can be deemed a controller where statutory thresholds and practical influence align. The ruling offers valuable insight for SPAC-era litigation and board governance in complex M&A.