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Delaware Court of Chancery Applies Business Judgment Rule Standard of Review to Controlling Stockholder Going Private Merger

June 17, 2013

By KEVIN C. LOGUE, LAURA KARVOSKY, & STEPHEN TRIGG

In the recent MFW decision, Chancellor Strine held that a going private merger that was conditioned upfront by a controlling stockholder on approval by both a properly empowered, independent special committee and an informed, uncoerced majority-of-the-minority stockholder vote would be reviewed under the deferential business judgment rule standard, instead of being subjected to the more stringent entire fairness review analysis. This decision provides helpful guidance for structuring and implementing such transactions.

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Image: Kevin C Logue
Kevin C Logue
Partner, Litigation Department