Professor Stephen Bainbridge, whose scholarship on Delaware corporate law has been cited in Delaware court opinions, has announced here the new scholarship he is planning to publish regarding Delaware’s Revlon line of cases. His post deserves to be quoted verbatim:
The proverbial bird in the hand
I’m working on a project entitled A Concise Guide to Revlon-Land—With Side Trips through Other Mysteries of Delaware Corporate Takeover Law, which as I have often threatened will be published as an eBook on Kindle rather than in a law review.Look for it by the end of the summer.
In it, I’m discussing the Delaware Supreme Court’s decision in Ryan v. Lyondell, and I observe that:
The Chancery Court conceded that Lyondell’s board “was active, sophisticated and generally aware of the value of the Company and the conditions of the markets in which the Company operated.” Lyondell, 2008 WL 2923427 at *13. The board long had been kept up to date on the company’s financial outlook and plans. The board had been kept fully abreast of the negotiations with Access and another potential bidder. The board had been briefed on Access’ proposal by Lyondell’s financial advisor.
Despite all this, however, the Chancery Court found the board’s conduct deficient in a number of respects: (1) “The entire deal was negotiated, considered, and agreed to in less than seven days.” Id. at *14. This gave the court “pause as to how hard the Board really thought about this transaction and how carefully it sifted through the available market evidence.” Id. This concern is consistent with an earlier Supreme Court caution that : “History has demonstrated boards ‘that have failed to exercise due care are frequently boards that have been rushed.’” McMullin v. Beran, 765 A.2d 910, 922 (Del. 2000). Having said that, however, boards often must act quickly. If courts insist that boards beat the bushes in search of the proverbial two birds, they force boards to risk losing the equally proverbial bird in the hand.
I rather like that last turn of phrase. But what do you think? Good? Forced? Over the top?
BTW, you’ll notice that citations are in the text. I hate how Kindle handles footnotes. So I’m not using them. Instead, I’m putting citations in the text. What do you think? Good idea? bad idea?