Two years ago Square and Twitter co-founder Jack Dorsey announced the acquisition of Jay Z's music streaming service Tidal [click here if you missed that].
This week Square shareholders were defeated after filing a class-action lawsuit against Dorsey over the purchase...
From Reuters
A Delaware judge on Tuesday dismissed a shareholder class action seeking to hold Jack Dorsey and other board members at Block Inc (SQ.N) liable for approving the payments company's purchase of Jay-Z's streaming service Tidal.
Chancellor Kathaleen McCormick in Delaware Chancery Court said the Florida pension fund leading the case did not show that Block's directors acted in bad faith though the purchase it "seemed, by all accounts, a terrible business decision."
Once known as Square, Block agreed in March 2021 to pay $306 million for an 87.5% stake in Tidal. After adjustments, it paid $237.3 million for an 86.2% stake.
Block's board was faulted for approving the purchase though Tidal was losing money, had lost major contracts, faced a Norwegian criminal probe into its streaming numbers, and had accepted a $50 million loan from Jay-Z to shore up its finances.
The pension fund also said Dorsey, a co-founder of Block and Twitter, was Block's only top executive who supported the purchase, and bought Tidal because he and Jay-Z were friends.
Its complaint quoted a New York University business professor who called the purchase "a $300 million bar tab to hang out with Jay-Z."
But in concluding that Block directors did not breach their fiduciary duties, McCormick said she could not "presume bad faith based on the merits of the deal alone."
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