Absent disclosure violations, the Delaware Court of Chancery is generally reluctant to enjoin a deal if there is not another bidder on the scene. Koehler v. NetSpend Holdings, C.A. No. 8373-VCG (Del. Ch. May 21, 2013), illustrates this reluctance. Even though the plaintiff established a reasonable likelihood of success on her claim that the defendants’ sale process failed to produce the best price and demonstrated irreparable harm, the Court of Chancery found the balance of equities weighed against issuance of a preliminary injunction.

Plaintiff Brenda Koehler, a stockholder of defendant NetSpend Holdings Inc., sought a preliminary injunction against defendant Total System Services Inc.’s (TSYS) acquisition of NetSpend. In 2012, one of NetSpend’s largest stockholders, JLL Partners Inc. (which owned approximately 31 percent of the outstanding stock), expressed interest in selling its NetSpend stock. Fearing the effect of such a sale on the open market, the NetSpend board of directors assisted JLL in finding a buyer on the private market. NetSpend’s independent directors met with two private equity firms about buying JLL’s stock. The private equity firms executed standstill agreements with NetSpend that precluded them from acquiring or merging with NetSpend for a certain amount of time (one year for one firm and two years for the other) and prevented them from asking NetSpend for a waiver of any of the provisions in the standstill agreements (don’t-ask, don’t-waive clauses).

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