Gordon Smith at The Congomerate blog writes that the offer that Kerkorian just made for Chrysler does not trigger Revlon duties under Delaware law for at least 2 reasons: One, Chrysler is part of a German company and so Delaware law likely will not apply. Two, it is only a division of a larger company and therefore, as it only involves the spinoff of a subsidiary, Revlon is not triggered. The good professor ends his post with a citation to the following Delaware Chancery Court decision: Cf. In re Toys "R” Us, Inc. Shareholder Litigation, 877 A.2d 975 (Del.Ch. 2005).
SUPPLEMENT: Elizabeth Nowicki of the Truth on the Market blog provides insightful commentary about when the Revlon duty (to maximize shareholder value when the company is for sale), applies in the context of a sale to a strategic buyer, but when the same company is sold to a private equity firm, the entire fairness standard is applied (to the extent it involves the board being on both sides of the transaction when they negotiate to keep their jobs after the purchase by a private equity firm, as opposed to a strategic competitor in which they likely will lose their jobs.) She supplements her commentary with remarks on the topic by Vice Chancellor Leo Strine, Jr. of the Delaware Chancery Court who was on a panel at the recent Tulane Corporate Law seminar.
STILL MORE: A long list of colorful quotes from His Honor at the Tulane seminar are captured here by the WSJ’s Deal Journal blog.