Delaware Supreme Court’s ruling provides additional grounds for dismissal in post-closing stockholder litigation regarding mergers that are not subject to entire fairness review.

Introduction -

Clarifying a long-standing debate, the Delaware Supreme Court has ruled that if a merger is not subject to “entire fairness” review, a fully-informed, uncoerced vote of the disinterested stockholders will invoke the protections afforded by the business judgment rule, rather than subjecting the transaction to review under the “enhanced scrutiny” of Revlon or Unocal. The decision is likely to have far-reaching implications for the almost universal shareholder litigation that today accompanies public company merger transactions.