17 Analyses of this case by attorneys

  1. Nevada Legislature Ponders Rejection Of Unocal And Revlon Standards

    Allen Matkins Leck Gamble Mallory & Natsis LLPKeith Paul BishopMarch 25, 2017

    Thirty years ago, the Delaware Supreme Court issued two seminal opinions concerning how courts ought to review director decisionmaking in merger and acquisition transactions. In the first case, Unocal Corporation v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985), the Supreme Court imposed a heightened standard to board responses to hostile takeover attempts. In the second case, Revlon, Inc. v. MacAndrews & ForbesHoldings, Inc., 506 A.2d 173 (Del. 1986), the Supreme Court imposed enhanced scrutiny on director decisions in a sale of control situations.

  2. Nevada Legislature Ponders Rejection Of Unocal And Revlon Standards

    Allen MatkinsKeith Paul BishopMarch 23, 2017

    Thirty years ago, the Delaware Supreme Court issued two seminal opinions concerning how courtsought toreviewdirector decision makingin merger and acquisition transactions. In the first case, Unocal Corporation v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985), the Supreme Court imposed a heightened standard to boardresponses to hostile takeover attempts. In the second case, Revlon, Inc. v. MacAndrews & ForbesHoldings, Inc., 506 A.2d 173 (Del. 1986), the Supreme Court imposed enhanced scrutiny on director decisions in a sale of control situations.

  3. Delaware Supreme Court Affirms Decision That Well-Pled Unocal Claim Does Not Automatically Excuse Pre-Suit Demand

    Shearman & Sterling LLPJanuary 11, 2018

    Ryan v. Armstrong, C.A. No. 12717-VCG (Del. Ch. May 15, 2017).  The Court of Chancery held that even a “well-pled” claim under Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985)—which applies enhanced scrutiny to certain takeover defensive measures—is not, standing alone, sufficient to excuse a pre-suit demand on the board under Court of Chancery Rule 23.1 where plaintiff failed to plead sufficient “particularized facts to imply a substantial likelihood of liability for damages . . . on the part of a majority of the directors.”

  4. Delaware Chancery Court Holds That Well-Pled Unocal Claim Does Not Automatically Excuse Pre-Suit Demand

    Shearman & Sterling LLPMay 23, 2017

    Plaintiff, a Williams shareholder, alleged that Williams’ directors were “motivated . . . by a desire . . . to entrench themselves” when they approved the WPZ acquisition in the context of “acquisition overtures” made toward Williams by another company, Energy Transfer Equity, L.P. (“ETE”).  The Court held that allegations of “defensive measures”—even if sufficient to trigger enhanced scrutiny under Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985)—do not result in “automatic demand excusal.”  Therefore, because demand futility was not otherwise adequately pleaded, the Court granted dismissal under Court of Chancery Rule 23.

  5. "The Continuing Evolution of Corwin in Delaware Courts"

    Skadden, Arps, Slate, Meagher & Flom LLPArthur BookoutMay 9, 2017

    at 19 (Del. Ch. Jan. 5, 2017) (holding that “a plaintiff challenging the decision to approve a transaction must first identify a deficiency in the operative disclosure document, at which point the burden would fall to defendants to establish that the alleged deficiency fails as a matter of law in order to secure the cleansing effect of the vote”).16 C.A. No. 12152-VCL, Tr. at 23 (Del. Ch. Sept. 6, 2016) (TRANSCRIPT) (granting motion to stay discovery pending resolution of motion to dismiss under Corwin).17Id.18 Relatedly, in In re Paramount Gold & Silver Corp. Stockholders Litigation, the Court of Chancery dismissed under Corwin allegations of an uninformed and coerced vote, but noted an “apparent tension” between Corwin and In re Santa Fe Pacific Corporation Shareholder Litigation, 669 A.2d 59 (Del. 1985), which “held in the context of a post-closing challenge that a fully informed stockholder vote approving a merger did not preclude review of certain deal protection devices under Unocal [Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985)].” Consol.

  6. Delaware Chancery Court Applies Corwin To Dismiss Post-Merger Fiduciary Duty Claim After Finding A Royalty Agreement Did Not Constitute An Unreasonable Deal Protection Device

    Shearman & Sterling LLPApril 17, 2017

    Plaintiffs thereafter filed this lawsuit asserting a claim against Paramount’s directors for breach of fiduciary duty. Plaintiffs contended that the Court should apply enhanced scrutiny to the deal under Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985), because the royalty agreement, when combined with the merger agreement’s termination fee provision, constituted an unreasonable deal protection device. Citing In re Santa Fe Pacific Corporation Shareholder Litigation, 669 A.2d 59 (Del. 1995), in which the Delaware Supreme Court held that a fully informed stockholder vote approving a merger did not preclude enhanced scrutiny review of certain deal protection devices, plaintiffs argued that Corwin did not render Unocal inapplicable.

  7. How to Answer When an Activist Calls

    Morris James LLPEdward McNallyFebruary 5, 2016

    But while Ebix's discussion of the scope of releases is important, Ebix is worth a closer review for its guidance on activism.Ebix involved various bylaw amendments and an agreement with an activist stockholder that placed two of the activist's nominees on Ebix Inc.'s eight-person board of directors (the director nomination agreement). The plaintiffs contended that both the bylaw amendments and the director nomination agreement were defensive measures designed to maintain the board's control over Ebix in violation of the Unocal v. Mesa Petroleum, 493 A.2d 946, principles. The court first upheld the director nomination agreement and then denied a motion to dismiss the claims that the bylaw amendments violated Unocal.

  8. The Most Important Principles of Delaware Corporate Law Can’t Be Found In the DGCL

    Allen Matkins Leck Gamble Mallory & Natsis LLPKeith Paul BishopNovember 30, 2015

    In the 1980s, the Delaware courts conjured up a different set of rules that it applies to some of the most fundamental corporate transactions.  See Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985) (responses to unsolicited takeovers); Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986) (sale of control), and Blasius Indus., Inc. v. Atlas Corp., 564 A.2d 651 (Del. Ch. 1988) (impeding stockholder voting).  Each of these cases has in turn birthed scores of cases interpreting and applying the standard.

  9. Delaware Supreme Court Addresses Novel Controlling-Stockholder Claim and Clarifies Effect of a Fully Informed, Uncoerced Stockholder Vote

    Sutherland Asbill & Brennan LLPHarry S. PangasOctober 9, 2015

    at *1.  18Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985) (holding that enhanced scrutiny review applies when a board unilaterally adopts defensive measures in response to a purported threat to corporate policy).  19 2015 WL 5772262 at *6.

  10. Mergers & Acquisitions Glossary

    Adler Pollock & Sheehan P.C.Andrew SpaconeAugust 19, 2015

    It requires that a response by the target's board be reasonable in relation to a “reasonable threat" to corporate policies posed by the bidder.  This enhanced judicial scrutiny standard was announced by the Delaware Supreme Court in the case of Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Delaware Supreme Court 1985), in which the court approved a discriminatory, defensive self-tender by Unocal to all its Shareholders except Mesa, the discrimination aspect of which has since been prohibited by the SEC.  In any event, the rule makes it easier for courts to explain their decisions but is so general that it is of somewhat limited value in making predictions of what courts will do.