Changing Attitudes: The Stark Results of Thirty Years of Evolution in Delaware M&A Litigation

To appear as a chapter in Sean Griffith, Jessica Erickson, David H. Webber, and Verity Winship, editors, RESEARCH HANDBOOK ON REPRESENTATIVE SHAREHOLDER LITIGATION (2017, Forthcoming)

51 Pages Posted: 9 Jun 2017  

Travis Laster

Delaware Court of Chancery

Date Written: September 20, 2016

Abstract

In the decades since 1985, the Delaware Supreme Court’s attitudes towards recurring third-party M&A scenarios have evolved significantly. Four areas that stand out are (i) the level of comfort with management-led, single-bidder processes, (ii) the legitimacy of defensive measures that appear designed to deter the emergence of alternative bids, (iii) the relative priority of fiduciary duties and third-party contract rights, and (iv) deference to stockholder voting. Current doctrine is much more favorable towards sell-side boards and the contract rights of third-parties. Although many factors have contributed, the two predominant reasons for these shifts are (i) the rise of sophisticated institutional investors who have the ability to influence the direction of the corporations in which they invest and determine the outcome of M&A events, and (ii) the system-wide failure of stockholder-led M&A litigation to generate meaningful benefits for investors, setting aside occasional recoveries by a small subset of the bar.

Keywords: Delaware, Mergers and Acquisitions, Court of Chancery, Revlon, Unocal

Suggested Citation

Laster, Travis, Changing Attitudes: The Stark Results of Thirty Years of Evolution in Delaware M&A Litigation (September 20, 2016). To appear as a chapter in Sean Griffith, Jessica Erickson, David H. Webber, and Verity Winship, editors, RESEARCH HANDBOOK ON REPRESENTATIVE SHAREHOLDER LITIGATION (2017, Forthcoming). Available at SSRN: https://ssrn.com/abstract=2982603

Travis Laster (Contact Author)

Delaware Court of Chancery

New Castle County Courthouse
500 N. King Street , Suite 11400
Wilmington, DE 19801-3734
United States
3022550510 (Phone)
3022550510 (Fax)

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