In its recent decision in In re Smurfit-Stone Container Corp. Shareholder Litigation, the Delaware Chancery Court held that so-called Revlon duties were triggered by a merger in which the target shareholders would receive their consideration half in cash and half in stock, with the stock component resulting in ownership of approximately 45 percent of the combined company.

Under Revlon, a board’s actions are reviewed not under the deferential business judgment rule standard, but rather under a heightened standard of reasonableness. When Revlon applies, the board of directors must engage in a process reasonably designed to obtain the best short-term value reasonably available for its shareholders. The Delaware Supreme Court has held that a board might find itself faced with Revlon duties in at least three scenarios...