Delaware Supreme Court Clarifies Standards in Corporate Takeovers

Delaware Supreme Court Clarifies Standards in Corporate Takeovers

May 23, 2016

Client Alert

Brownstein Client Alert, May 23, 2016

On May 6, 2016, the Delaware Supreme Court upheld a merger between Zale Corporation (“Zales”) and Signet Jewelers Limited (“Signet”) when it affirmed a lower court’s dismissal of a shareholder class action that sought to enjoin the merger, thereby allowing the merger to go forward.1 In so ruling, the
court gave some comfort to boards of directors and their financial advisors by clarifying the limits of liability when a corporate sale is approved by an informed majority of disinterested shareholders. In that situation, when a corporate change in control has been approved by a majority of informed, disinterested shareholders, Delaware courts will almost always dismiss claims seeking to avert the transaction.

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