Jason M. Halper is a partner at Cadwalader, Wickersham & Taft LLP. This post is based on a Cadwalader publication by Mr. Halper, Alejandra Contreras, and Hyungjoo Han. This post is part of the Delaware law series; links to other posts in the series are available here.
Two recent decisions from the Delaware Court of Chancery faithfully apply the Delaware Supreme Court’s holding in Corwin v. KKR Financial Holdings LLC. No surprise there. Corwin held that when “a transaction not subject to the entire fairness standard is approved by a fully informed, uncoerced vote of the disinterested stockholders, the business judgment rule applies.” That is so even if, pre-Corwin, an all-cash merger otherwise would have been subject to enhanced scrutiny under Revlon.
The significance of the two recent lower court decisions—In re Columbia Pipeline Group, Inc. Stockholder Litigation and In re Saba Software, Inc. Stockholder Litigation—lies not in the fact that they applied Corwin, but how each did so on the facts alleged in the complaints. In reaching opposite results (dismissal of the complaint in Columbia and denial of a motion to dismiss in Saba), the decisions provide important guidance regarding, among other things, the types of disclosures that are material; the appropriate oversight and handling of a sales process by a board and its financial advisor; circumstances that suggest a coerced stockholder vote; and the scope of aiding and abetting liability for the buyer.