In Gantler v. Stephens, 2008 WL 4011124 (Del. Ch., Feb. 14, 2008), read opinion here, the Chancery Court addresses the right of the board to reject an offer of merger and enjoy the protection of the business judgment rule when doing so. UPDATE: On Jan. 27, 2009, the Delaware Supreme Court overruled this decision, see case summary here.
Also decided in this Chancery decision was an issue related to the ratification by shareholders of a reclassification plan which the court found to have been done with full disclosure. Thus, even if a majority of the board was not independent, ratification by a majority of the unaffiliated shareholders provided the necessary justification to dismiss the claims challenging the transaction. Prof. Bainbridge provides his analysis here, with reference to his prior scholarship on the issues as well as reference to the summary of the case by the Delaware Business Litigation Report here. Notably, the court cites to the prolific Prof. Bainbridge in a footnote for support of the court’s reasoning.