Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. Rewritten

Abstract

This is a rewritten opinion of Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., to be published as part of the edited volume FEMINIST JUDGMENTS: REWRITTEN CORPORATE LAW (KELLI ALCES WILLIAMS, ANNE CHOIKE, & USHA R. RODRIGUES, EDS.) (CAMBRIDGE UNIVERSITY PRESS, 2023). In Revlon, the Delaware Supreme Court famously announced that when it becomes clear that a “break-up of [a] company is inevitable,” the board’s duty “change[s] from preservation of [the company] as a corporate entity to the maximization of the company’s value at a sale for the stockholders’ benefit.”

The rewritten opinion reaches the same overall conclusions as the original opinion. However, the rewritten opinion utilizes feminist viewpoints and reasoning; it expands upon various aspects of the original opinion, principally using the masculinity contest culture theory. It begins with a more detailed narrative exposition of the facts. The rewritten opinion focuses on the differing backgrounds of Michel Bergerac, CEO & Chair of Revlon, and Ronald O. Perelman, CEO & Chair of Pantry Pride. It also addresses the composition of the Revlon board which was dominated by men with only one woman director. The rewritten opinion places emphasis on the animosity between Bergerac and Perelman and the role it might have played in the Revlon board’s continued rejections of Perelman and Pantry Pride’s offers.

The rewritten opinion differentiates between director independence and disinterestedness. It develops a definition of independence, which considers various factors, including diversity, length of board service, friendships, and overlapping social circles. The rewritten opinion recognizes that when a break-up of the company becomes inevitable a board is obligated to maximize shareholder value and take reasonable steps to extract the highest bids from all potential bidders. But it specifies that value can encompass factors beyond the highest financial bid. The rewritten opinion clarifies that in weighing various bids, boards can take a broader view and consider the potential impact of each bid, including goodwill and longer-term plans for the company.

Keywords: Revlon, fiduciary duties, change of control, maximizing stockholder value, deal protection devices, feminist, corporate law, non-constituencies, stakeholders, auction, lock-up option, no shop, termination fee, director independence, disinterestedness, break-up, hostile offer, tender offer

JEL Classification: K20, K22, G34, K2