Delaware Chancery Court Refines Applicability Of Entire Fairness And Business Judgment Standards Of Review For Certain Merger Transactions


In a recent decision, the Delaware Chancery Court provided new guidance on the standard of review to be applied to a merger in which a controlling stockholder participates and receives different aggregate consideration than minority stockholders, but does not stand on "both sides of the transaction."

In In re John Q. Hammons Hotels Inc. Shareholder Litigation,1 while determining that the entire fairness standard of review applied to a transaction in which the minority stockholders were bought out by an independent third party and not by the controlling stockholder, the Chancery Court also ruled that the use of sufficient procedural protections could have resulted in the application of the business judgment standard of review, although the protections in this particular case were held to be insufficient.

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Published In: Civil Procedure Updates, General Business Updates, Mergers & Acquisitions Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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