Delaying a Merger Vote Under Delaware Law: A New Standard of Review?

This post is from Theodore Mirvis of Wachtell, Lipton, Rosen & Katz.

Someone very famous once said that the common law grinds slowly but exceedingly fine (or something like that).  Someone else once said that when it comes to the stockholder franchise, the grinding can get bumpy.  Yet a third person is reported to have commented that, when you throw in the fact of life that stockholder activists now seem to have the power to affect the outcome of merger votes by holding out for a final bump–and no one can really tell if the activists even own shares in any economic sense–well, that is why God created directors.

But none of that matters.  What matters is what the Delaware courts say about directors’ postponing stockholder votes on mergers, and that subject received some close scrutiny and a thorough–if not intermediate–review in Vice Chancellor Strine‘s recent opinion in Mercier v. Inter-Tel.  The opinion, described briefly in this Memorandum, grapples with what came before on the subject and is certain to be the touchtone for what comes after, as the common law continues to grind–even in August.

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