Big doctrinal developments sometimes come wrapped in modest decisions. Such is the lesson of a recent one-page order from the Delaware Supreme Court that appears to clear a path to deferential judicial review of controlling-stockholder freeze-out mergers and an unpublished order from a California trial court enjoining a hostile bid on the basis of a breached confidentiality agreement. Both decisions have important lessons for M&A practitioners.
In Swomley v. Schlecht, Delaware’s high court affirmed a bench ruling granting a motion to dismiss. The case was a class action brought by minority holders of SynQor Inc., who alleged that the majority owner had squeezed them out at an unfair price. But the controlling stockholder had conditioned the transaction on the approval of both an independent committee of disinterested directors and the minority stockholders voting separately. Because of these built-in protections for the minority stockholders, the controller argued, the case should be dismissed under the Delaware Supreme Court’s landmark 2014 ruling in Kahn v. M&F Worldwide Corp.
PRICE NOT ONLY FACTOR
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