Are no-talk clauses in stock-for-stock merger agreements dead in Delaware? Three recent cases from the Delaware Chancery Court appear to allow a board of directors to consider other merger offers even if the board has agreed to a no-talk provision with an initial suitor.
No-talk clauses, in essence, forbid a target’s board of directors from engaging in merger discussions with other bidders — even those presenting bona fide unsolicited offers — until a shareholder vote occurs on the initial bid. The clause allows acquirors to protect the substantial investment necessary to make the offer, and helps targets lock in a deal that might not otherwise occur.
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