In RE MFW Shareholders Litigation: Delaware Chancery Court Answers Novel Question of Law and Applies Business Judgment Rule to a Controlling Stockholder-backed Going-Private Merger

June 04, 2013

Addressing an unsettled area of Delaware law, the Delaware Court of Chancery (the “Chancery Court”) revisited the appropriate standard of review for a going-private merger with a controlling stockholder. Writing for the Court in In re MFW Shareholders Litigation, C.A. No. 6566-CS (Del. Ch. May 29, 2013), Chancellor Strine concluded that, “when a controlling stockholder merger has, from the time of the controller’s first overture, been subject to (i) negotiation and approval by a special committee of independent directors fully empowered to say no, and (ii) approval by an uncoerced, fully informed vote of a majority of the minority investors, the business judgment rule standard of review applies.”

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