The shareholder alleged that Block's founder and CEO Jack Dorsey and the company’s board of directors breached their fiduciary duties in agreeing to pay roughly $300 million to take control of Tidal.
LONDON, ENGLAND - MARCH 03: In this photo illustration, the logo for the US tech firm"Block" is displayed and reflected in a number of digital screens on March 03, 2023 in London, England. Block, the US tech firm founded by Twitter creator Jack DorsA Delaware judge has dismissed a shareholder lawsuit against financial technology company Block Inc. over its 2021 acquisition of majority ownership in Tidal, the music streaming service partly owned by rapper Jay-Z.
McCormick noted that the demand requirement is a manifestation of Delaware’s business judgment rule, under which courts defer to the decision-making of corporate directors unless there is an indication they acted in bad faith. That deference remains even if a corporate decision turns out to be unwise.
Nevertheless, Dorsey, who is also the co-founder and former CEO of Twitter, began thinking of acquiring Tidal after summering with his friend Carter in the Hamptons in 2020, according to court documents. By videoconference from the Hamptons, he raised the issue during a Block board meeting. The directors agreed to form a transaction committee while Dorsey drafted and submitted a nonbinding letter of intent to purchase Tidal for $554.8 million.
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