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Court Of Chancery Accepts Deal Protection Terms

Posted In M&A

In re Orchid Cellmark Inc. Shareholders Litigation, C.A. 6373-VCN (May 12, 2011)

In another decision reviewing whether deal protection agreements are impermissibly preclusive, the Court noted: " one of these days some judge is going to say "no more"..."   This decision and its recent companion decision,  In Re Answers Corporation Shareholders Litigation, C.A. 6170-VCN (April 11, 2011),  list many deal protection measures that the Court has accepted.

Since the Delaware Supreme Court's split decision in Omnicare, Inc. v. NCS Healthcare Inc., 818 A.2d 914 (Del. 2003) rejecting a lock up agreement with the majority owner, the Delaware courts have not overturned such deal protection measures in merger agreements.  Maybe this decision is a warning.   After all, the Chancellor's recent decision in Air Products and Chemicals Inc. v. Airgas Inc., 16 A.3d 48 (Del. Ch. 2011)  also expressed some doubts that Delaware should be so protective of a Board's power to block a takeover.  We shall see.

Tags: M&A


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