Delaware Supreme Court Affirms Ruling in Favor of Texas Pacific Land Corporation on Litigation Related to Stockholders’ Agreement

Rhea-AI Summary

Texas Pacific Land Corporation (NYSE: TPL) receives a favorable ruling from the Delaware Supreme Court in a litigation case with Horizon Kinetics LLC and others regarding a stockholders' agreement. The Supreme Court affirmed the Court of Chancery's decision in favor of TPL, stating that the Investor Group should have voted with the Board's recommendation on a proposal to increase the number of authorized shares of common stock.

Insights

Legal Expert

The affirmation by the Delaware Supreme Court of the Court of Chancery's ruling in favor of Texas Pacific Land Corporation (TPL) has significant legal and strategic implications for the company and its shareholders. The dispute centered on the adherence to a Stockholders' Agreement and the voting process regarding an increase in authorized shares of common stock. The resolution of such a dispute provides clarity and legal certainty, which can be beneficial for TPL's corporate governance.

From a legal perspective, the court's decision reinforces the binding nature of shareholder agreements and the expectations of contractual compliance. It underscores the importance of clear drafting and mutual understanding of shareholder agreements, which are pivotal in guiding corporate actions and resolving disputes. This legal precedent can influence future agreements and litigation in corporate governance, potentially affecting other companies with similar agreements.

Financial Analyst

The Supreme Court's affirmation permits TPL to increase its number of authorized shares of common stock, which is a strategic financial maneuver. This increase in authorized shares could be used by TPL for various purposes such as raising capital, executing stock splits, or acquiring other businesses through stock transactions. The ability to issue more shares can provide TPL with greater financial flexibility and could be indicative of future growth strategies.

However, an increase in authorized shares also opens the possibility of share dilution for current stockholders, which can affect the stock's value. Share dilution occurs when a company issues additional shares, reducing the ownership percentage of existing shareholders. Investors will closely monitor how TPL plans to utilize these additional shares and the potential impact on earnings per share (EPS), a key metric used to gauge a company's profitability on a per-share basis.

Market Research Analyst

This legal victory may influence investor sentiment and market perception of TPL's stock. The resolution of a high-profile litigation removes a layer of uncertainty, which is generally viewed positively by the market. It signals to investors that TPL is capable of successfully navigating legal challenges and protecting its corporate interests.

Moreover, the affirmation by the Supreme Court could be seen as an endorsement of TPL's current management and governance practices, potentially affecting the company's reputation and investor confidence. This may have a ripple effect on TPL's stock performance and could be factored into the investment decisions of both retail and institutional investors.

DALLAS--(BUSINESS WIRE)-- Texas Pacific Land Corporation (NYSE: TPL) (“TPL” or the “Company”) announced today that the Delaware Supreme Court (the “Supreme Court”) affirmed the December 1, 2023 ruling of the Delaware Court of Chancery (the “Court of Chancery”) in favor of TPL in the litigation between the Company and Horizon Kinetics LLC, Horizon Kinetics Asset Management LLC, SoftVest Advisors, LLC and SoftVest, L.P. (collectively, the “Investor Group”), in Horizon Kinetics, LLC, et al. v. Texas Pacific Land Corporation, (C.A. No. 478, 2023) (Del.).

As previously disclosed, on December 1, 2023, the Court of Chancery issued a post-trial decision ruling in favor of the Company. Specifically, the Court of Chancery ruled that under the terms of the June 2020 Stockholders’ Agreement between the Company and the Investor Group, at the Company’s 2022 annual meeting of stockholders, the Investor Group should have voted with the Board’s recommendation on Proposal 4, the Company’s proposal to increase the number of authorized shares of common stock, which has been deemed approved by stockholders. On February 26, 2024, the Supreme Court affirmed the Court of Chancery’s post-trial decision and final judgment in favor of the Company.

About Texas Pacific Land Corporation

Texas Pacific Land Corporation (NYSE: TPL) is one of the largest landowners in the State of Texas with approximately 868,000 acres of land in West Texas, with the majority of its ownership concentrated in the Permian Basin. The Company is not an oil and gas producer, but its surface and royalty ownership allow revenue generation through the entire value chain of oil and gas development, including through fixed fee payments for use of our land, revenue for sales of materials (caliche) used in the construction of infrastructure, providing sourced water and treated produced water, revenue from our oil and gas royalty interests, and revenues related to saltwater disposal on our land. The Company also generates revenue from pipeline, power line and utility easements, commercial leases, and temporary permits related to a variety of land uses including midstream infrastructure projects and hydrocarbon processing facilities.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240227753042/en/

TPL Investor Relations

IR@texaspacific.com

Source: Texas Pacific Land Corporation

FAQ

What is the ticker symbol for Texas Pacific Land Corporation?

The ticker symbol for Texas Pacific Land Corporation is TPL.

What was the recent ruling by the Delaware Supreme Court regarding Texas Pacific Land Corporation?

The Delaware Supreme Court affirmed the Court of Chancery's decision in favor of Texas Pacific Land Corporation in a litigation case with Horizon Kinetics LLC and others.

What was the Court of Chancery's ruling on Proposal 4 at Texas Pacific Land Corporation's 2022 annual meeting of stockholders?

The Court of Chancery ruled that the Investor Group should have voted with the Board's recommendation on Proposal 4, which was the Company's proposal to increase the number of authorized shares of common stock.

When did the Supreme Court affirm the Court of Chancery's decision in favor of Texas Pacific Land Corporation?

The Supreme Court affirmed the Court of Chancery's decision on February 26, 2024, in favor of Texas Pacific Land Corporation.