Analysis: TransPerfect continues to stir Delaware courts

Perhaps like the “War of the Roses” movie-style split that spawned their unique Delaware court case, the litigants in the TransPerfect Global matter before Delaware Chancery Court — former betrothed lovers Phil Shawe and Liz Elting — can’t even agree this summer on whether the mediation attempt to resolve their legal dispute has broken down.

The mediation process was launched in June by Delaware Court of Chancery Chancellor Andre Bouchard, leveraging former chancellor of 14 years, William B. Chandler III, an attorney at Wilson Sonsini Goordich & Rosati, to mediate the dispute.

It reached an impasse last month, according to an industry report by Law360.com.

Both sides, particularly their legal counsel, have generally been reluctant to talk about the case, citing constraints by the court on what can be said either publicly or to the news media.

However, people close to the case say that Shawe is unhappy with the declaration of an impasse, reporting that he still is seeking the help of the mediator to find a satisfactory resolution.

Shawe put an exclamation mark behind that at a public dinner in New York City’s Brooklyn Borough just two weeks ago when he made a flamboyant public “Texas Shootout” offer to Elting.

“Basically, she names the figure, $300 million, $400 million, whatever,” he told a crowd of hundreds, “and I’ll tell her whether I’ll be a buyer or a seller at that price!” Shawe already is known to have offered Elting $300 million several times for her share of the company, but says she never has responded.

“Delaware’s Chancellor Bouchard authorized an investigation Tuesday into leaks of bidder data and other details on the court-ordered sale of translation company.

The possible sale of TransPerfect is what’s driving the case.

Elting, who owns 50 percent of the company, wants a sale. Insiders suggested she rigged the public stalemate in order to bolster a court case. Shaw — who owns 49 percent, and his mother Shirley Shawe owns the other 1 percent — does not want the sale.

Elting wants out of the company, and she, like any shareholder, wants to maximize its sale value. Shawe wants to stay in the company, continue to run it and grow it, and he does not want to sell his share.

To the extent that the court forces Shawe into a sale process with Elting, to maximize the value of the entity, Elting will get more money and Shawe would have to buy back his own interest at higher than current market value, because the court would be creating “a control premium,” a higher value, that would benefit her more than him.

TransPerfect is one of the “big three” companies in legal translations. Founded in 1992, the company has revenues that exceed $500 million, with net profit in the $75 million range.

One reason employees have become so deeply involved in a national PR campaign to get Delaware’s Court of Chancery out of the TransPerfect matter is because the company relies heavily on full-service employees with good benefits, while other companies reportedly rely on outsourcing.

The standoff between the two principals centers on a long important legal concept, “takings,” which has been before the Supreme Court of the United States in recent years.

Recent court decision have become more conservative, favoring the property rights inherent in ownership over the power of government to “take” someone’s property.