DGCL: M&A Disclosures

Summary

Covers application of DGCL to M&A disclosures

Recent Cases

Delaware Court of Chancery

Decision 10.08.04 859 A2d 80(Del Ch 2004)
Required notice given after a short-form merger must either be accompanied by detailed financial disclosures or disclose summary financial information and adequately advise shareholders about where and how to obtain more detailed information
Motion for summary judgment granted in part, denied in part
Decision re: Remedy 3.04.05

Alessi v Beracha [Earthgrains] Odd-lot Tender Offers

Decision 5.11.04
Company failed to disclose secret merger negotiations while a company sponsored odd-lot stock purchase program was in effect
Company was acquired at a substantial premium
Court refused to dismiss fiduciary duty claims against directors
2004 WL 1052389

In re The MONY Group Inc Proxy Statement Disclosures

Court grants preliminary injunction delaying stockholder vote on a proposed merger
Proxy statement contained inadequate information about change-in-control agreements for senior management
Limited preliminary injunction granted

Further claims of inadequate disclosure in the revised proxy statement lack merit
Either factually unsupported or would improperly require the defendant directors to characterize their actions and decisions

Discussed in Gilliland v Motorola (Del Ch 2004)
All parties rely heavily upon the Supreme Court's decision in Zirn v. VLI Corp.18 In Zirn, the stockholder plaintiff argued that the corporate defendants had made insufficient disclosure in their notice of short-form merger, which contained only summary financial information and a history of recent trading prices.19 The Supreme Court emphasized that the majority stockholder in a short-form merger must disclose all information materially related to the decision whether to accept the consideration offered or seek appraisal.20 The Supreme Court also noted, however, that the short-form merger is "an essentially summary procedure," and that the notice of merger "is primarily intended to notify the stockholders of action being taken by the parent corporation and to apprise the stockholders of their appraisal remedy."21

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