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No Auction Required – Delaware Supreme Court Affirms Board Flexibility under Revlon

Ruling that an active solicitation process is not necessarily required for a target board of directors to satisfy its fiduciary duties in a change of control transaction, the Delaware Supreme Court overturned a preliminary...more

In re Novell, Inc. S’holder Litig., C.A. No. 6032 (Del. Ch. Nov. 25, 2014) (Noble, V.C.)

In this memorandum opinion, the Court of Chancery granted summary judgment in favor of defendants on claims alleging that directors acted in bad faith by favoring a bidder in a sale process for reasons other than the pursuit...more

Court Clarifies Law on Enforceability of Obligations of Non-Signatories in Private Mergers

In a fact-specific case with potential ramifications for future mergers under Delaware law, Cigna Health and Life Insurance Co., a preferred stockholder of Audax Health Solutions Inc., whose shares were extinguished by a...more

Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, C.A. No. 7906 (Del. Ch. Nov. 26, 2014) (Glasscock, V.C.)

In this memorandum opinion, the Court of Chancery largely denied but granted in part defendants’ motion to dismiss claims relating to a 2011 merger in which plaintiffs Great Hill Equity Partners IV, LP and related entities...more

Information Letter: Management Liability: Potential Risk Zones (Russia)

The recent court practice shows that lawsuits seeking compensation of damages caused to company by its management are being filed with increasing frequency. It is largely due to courts' departure from formalistic approach to...more

Delaware Court Provides Guidance on Acceptable Deal Protection Mechanisms and Scope of Third Party Aiding and Abetting Liability...

On November 25, 2014, the Delaware Court of Chancery issued a decision in In Re Comverge, Inc. Shareholders Litigation, which: (1) dismissed claims that the Comverge board of directors conducted a flawed sales process and...more

Delaware Court of Chancery Applies Business Judgment Rule to Directors Who Approve Merger Supported by Large Shareholders

In its October 24, 2014, decision in In re Crimson Exploration Inc. Stockholder Litigation, C.A. No. 8541, the Delaware Court of Chancery confirmed that the business judgment rule is applicable in evaluating claims for breach...more

In re KKR Financial Holdings LLC S'holder Litig., Consol. C.A. No. 9210-CB (Del. Ch. Oct. 14, 2014) (Bouchard, C.)

In this opinion, the Court of Chancery dismissed a purported class action by stockholders of KKR Financial Holdings LLC (“KFN”) challenging its acquisition by KKR & Co. L.P. (“KKR”) in a stock-for-stock merger, rejecting...more

Delaware Court of Chancery Rejects Controlling Stockholder Claims and Applies Business Judgment Rule to Merger Suits

In In re KKR Financial Holdings LLC Shareholder Litigation, C.A. No. 9210 (Del. Ch. Oct. 14, 2014), the Delaware Court of Chancery dismissed a shareholder derivative suit brought by shareholders of KKR Financial Holdings LLC...more

Delaware Court Confirms Applicability of Business Judgment Rule to Investment Decisions of Insolvent Corporations

In its October 1, 2014 decision in Quadrant Structured Prods. Co. v. Vertin, et al., C.A. No. 6990, the Delaware Court of Chancery applied the protections afforded under the business judgment rule to investment strategies...more

In re Cornerstone Therapeutics Inc. S'holder Litig., Consol. C.A. No. 8922-VCG (Del. Ch. Sept. 10, 2014) (Glasscock, V.C.)

In this opinion on a motion to dismiss, the Court of Chancery held that, in a controller transaction governed by entire fairness review, a plaintiff need not specifically plead non-exculpated breaches of duty as to...more

Rural/Metro II: Additional Lessons for Financial Advisors, Directors and Counsel in M&A Transactions And Related Litigation

On October 10, 2014, the Delaware Court of Chancery issued a decision awarding nearly $76 million in damages against a seller’s financial advisor. In an earlier March 7, 2014 opinion in the case, In re Rural/Metro Corp....more

Merger Discussions & Non-Compete Agreements: A Recent Case from the EDNY

A recent case out of the Eastern District of New York raises interesting questions about the use of non-compete agreements in connection with merger talks. Let’s take a look: Calico Cottage, Inc. is a New York company...more

The Delaware Court of Chancery Finds Two Transactions Were Not Entirely Fair, but Awards No Damages Where the Prices of the...

On September 4, 2014, the Delaware Court of Chancery issued two lengthy post-trial opinions, both authored by Vice Chancellor John W. Noble, finding that recapitalization or restructuring transactions did not satisfy the...more

Forum Selection Bylaws–More Good News

Fending off merger-related shareholder lawsuits keeps getting easier. Just a week ago, the Delaware Chancery Court upheld the enforceability of the bylaw of a Delaware corporation headquartered in North Carolina that selected...more

Fiduciary Duties in the Context of Dent v. Ramtron Int’l Corp.

The Delaware Court of Chancery recently addressed a number of claims commonly made in the “ubiquitous” stockholder litigation that follows announcement of a public merger or acquisition transaction. In Dent v. Ramtron Int’l...more

Delaware Court Dismisses Shareholder Class Action Suit Attacking Corporate Merger

Almost every proposed corporate merger is met with a shareholder suit against the acquiring company, merger target and the target’s board of directors in which the shareholders assert that the board breached its fiduciary...more

Have Your Directors Met Their Revlon Duties? Delaware Court Dismisses Strike-Suit Allegations as Merely Cosmetic

In a virtual course on how to bring—or not bring—an M&A strike suit, on June 30, a Delaware Chancery Court dismissed all shareholder claims against a merger target and its acquirer, ending nearly two years of litigation. ...more

In re El Paso Pipeline Partners, L.P. Derivative Litig., C.A. No. 7141-VCL (Del. Ch. Jun. 12, 2014) (Laster, V.C.)

In this memorandum opinion resolving cross-motions for summary judgment, the Court of Chancery dismissed in part claims challenging a drop-down sale governed by a limited partnership agreement that supplanted fiduciary duties...more

In re TriQuint Semiconductor, Inc. S'holders Litig., C.A. No. 9415-VCN (Del. Ch. Jun. 13, 2014) (Noble, V.C.)

In this letter opinion denying plaintiffs’ motion to expedite, the Court of Chancery held that plaintiffs, shareholders of TriQuint Semiconductor, Inc. (“TriQuint” or the “Company”), failed to assert a colorable claim that...more

Delaware Court Clarifies Director and Officer Liability in M&A Transactions

In Chen v. Howard-Anderson, 87 A.3d 648 (Del. Ch. 2014), the Delaware Court of Chancery (Laster, V.C.) held that directors and officers can be held liable for their participation in a change-of-control transaction if their...more

Shareholder Activism in Germany Following Takeover Announcements

Over the past few years there has been a noticeable increase in the frequency of activist investors building up considerable stakes in German listed companies in the context of public takeovers. One reason for this...more

What if the Apple/Beats story is fake?

The internet blew up last week when rumors leaked that Apple was preparing to buy Dr. Dre’s and Jimmy Iovine’s Beats headphones company for $3.2 billion. Steve Jobs never would have done that! It’s confusing! It’s...more

Delaware Court of Chancery Underscores Heightened Pleading Standard Necessary to Support a Claim for Breach of Fiduciary Duty In...

In Houseman v. Sagerman, C.A. No. 8898-VCG, 2014 WL 1478511 (Del. Ch. Apr. 16, 2014), the Delaware Court of Chancery (Glasscock, V.C.) granted, in part, a motion to dismiss filed by certain directors and the financial advisor...more

Chen v. Howard-Anderson: A Study in the Standards of Review and of D&O Conduct in the Merger Context

Litigation over challenges to corporate mergers has swelled in recent years, exposing directors, officers and their D&O insurers to large amounts of defense costs and potentially great liability. The Delaware Chancery Court...more

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