In re OPENLANE, Inc. Shareholders Litigation: Delaware Chancery Court Upholds “Sign and Consent” Transaction and Board Process


On September 30, 2011, Vice Chancellor Noble issued an opinion in In re OPENLANE, Inc. Shareholders Litigation that reiterated the permissibility of using a “sign and consent” structure for obtaining stockholder approval of a merger. The OPENLANE decision is also noteworthy as Vice Chancellor Noble declined to grant injunctive relief despite the fact that many of the efforts typically undertaken by a target company’s board of directors in a sale process were not utilized in the transaction at issue.

OPENLANE demonstrates that the restrictions against a fully locked-up merger set forth in the 2003 Omnicare2 decision do not bar stockholders from locking up a transaction through written consents immediately after the execution of a merger agreement. The OPENLANE decision further confirms that a board can satisfy its Revlon duties under appropriate circumstances even when its actions do not conform to customary practices in the change of control context.

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