A Significant Decision For Going-Private Transactions
August 22, 2013, 9:25 PM EDT
Law360, New York (August 22, 2013, 9:25 PM EDT) -- In a decision with great potential significance for the structuring of going-private transactions, Delaware Chancellor Leo Strine recently held in In re MFW Shareholders Litigation that a merger with a controlling stockholder would be reviewed under the highly deferential business judgment rule rather than the “entire fairness” standard if the merger is structured to include certain procedural safeguards for minority shareholders.
The Business Judgment Rule and the Entire Fairness Standard
As the Delaware Supreme Court has recognized, in litigation challenging board action, “[t]he choice of the...