A major stockholder has filed a class-action lawsuit in Delaware Chancery Court seeking to halt Kennedy-Wilson Holdings’ $1.65 billion take-private transaction, arguing the deal violates Delaware’s landmark anti-takeover statute and cannot legally close without a supermajority vote of disinterested investors.
In the complaint filed Thursday, plaintiff Bruce Taylor contends that the buyer consortium — led by Kennedy-Wilson chair and CEO William McMorrow and Canadian insurance giant Fairfax Financial Holdings Ltd. — became “interested stockholders” under Section 203 of the Delaware General Corporation Law months before the merger agreement was signed, triggering heightened voting requirements that the current deal structure ignores.
Section 203 is designed to protect public companies from coercive takeovers. It prohibits a merger with an “interested stockholder” (anyone owning 15% or more of voting power) for three years unless the board pre-approved the transaction that created the interested status or the deal receives approval from two-thirds of the disinterested shares.
Taylor alleges that Fairfax already beneficially owned more than 15% of Kennedy-Wilson’s voting power (approximately 28% when including warrants) well before the deal was announced. The lawsuit points to a November 4, 2025 joint bidding agreement between Fairfax and a McMorrow-controlled entity in which the parties agreed to “work together in good faith” to pursue the transaction — an arrangement that, under the broad definition in Section 203, imputes ownership and makes the entire consortium “interested stockholders.”
Because the Kennedy-Wilson board never publicly disclosed pre-approval of the consortium’s formation, the plaintiff argues the merger can only proceed with the two-thirds supermajority vote of unaffiliated stockholders — not the simple majority currently required under the merger agreement.
The $10.90-per-share all-cash offer, announced this week, represents a 46% premium to the stock’s closing price on November 4, 2025. Fairfax has committed up to $1.65 billion in equity to fund the deal, redeem preferred shares, and cover costs. Upon closing — expected in Q2 2026 — Fairfax would hold majority economic interest in the now-private company while McMorrow and key executives continue running operations.
Kennedy-Wilson, a Beverly Hills-based real estate investment manager with roughly $31 billion in assets under management, focuses on multifamily and commercial properties across the United States and Europe.
The lawsuit also accuses McMorrow and other directors of breaching their fiduciary duties by structuring the transaction to evade statutory protections for public shareholders. Taylor is seeking a court declaration that the merger cannot close without the required two-thirds vote, plus an injunction blocking the stockholder vote until the agreement is revised and corrective disclosures are made.
Representatives for Kennedy-Wilson, Fairfax, and the buyer entities did not immediately respond to requests for comment.
This high-stakes Delaware battle could set important precedent for how take-private deals involving existing large shareholders and management are structured going forward, particularly in an environment where activist investors and institutional holders are increasingly scrutinizing insider-led buyouts.
