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Court Of Chancery Gives Guidance On What Constitutes Bad Faith

Posted In M&A

In Re Meadwestvaco Stockholders Litigation, C.A. No. 10617-CB (August 17, 2017)

As this decision explains, to state a claim attacking a merger on the basis that the Board acted in bad faith you need more than  accusations that directors were motivated to avoid a proxy fight involving an activist investor. Informed stockholder approval, disinterested directors, careful consideration, a premium price, reasonable deal protection devices, and prominent advisors all work to negate inferences of bad faith.

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