On October 10, 2016, the Delaware Court of Chancery issued its decision in In re Books-A-Million, Inc. Stockholders Litigation. The decision, authored by Vice Chancellor J. Travis Laster, is important because it applies the framework set forth in In re MFW Shareholders Litigation and Kahn v. M & F Worldwide Corporation (“MFW”) for structuring controller buyouts so as to obtain business judgment review rather than entire fairness review, adding several important developments to the fledgling body of MFW case law. Applying the MFW framework to the 2015 controller buyout of Books-A-Million, Inc. (“BAM” or the “Company”), Vice Chancellor Laster concluded that the MFW criteria had been satisfied, that business judgment review was thus appropriate, and that all of the plaintiff stockholders’ claims failed under that standard of review.

King & Spalding served as counsel to the special committee of directors utilized by BAM in connection with the controller buyout, both during the transaction and the subsequent litigation in the Court of Chancery. Herein, we provide a primer on the MFW framework and discuss the key lessons from the Books-A-Million decision that will be helpful to companies, directors, and their counsel interested in evoking MFW protection, from both a transactional and litigation perspective. After discussing these lessons, we address the background of the transaction, the resulting stockholder litigation, and provide an overview of the Court of Chancery’s decision.