Equal Consideration for All Shareholders as Safe Harbor to Get to Business Judgment Rule in Sale of Controlled Company

摘要

In In re Synihes, Inc. Shareholder Litigation, the Delaware Court of Chancery dismissed a stockholder challenge to the acquisition of Synthes, a publicly traded company with a controlling stockholder for $21.3 billion, payable in a mix of 65 percent stock and 35 percent cash. The court held that there was "no basis to conclude that the controlling stockholder had any conflict with the minority that justifie [d] the application of the entire fairness challenge" because the controlling stockholder accepted pro rata treatment with the minority in the merger, which "remains a form of safe harbor" under Delaware law. Moreover, the court held the Revlon doctrine inapplicable to this mixed-consideration merger.