Harmonizing Going Private Transactions

Philadelphia partner Doug Raymond wrote an article for Directors & Boards titled “Harmonizing Going Private Transactions.” The column reflects on the long-standing difficulty stockholders with a controlling stake in Delaware corporations have faced in acquiring the remaining shares they do not own.

In an ostensibly welcome development for such stockholders, In re MFW Shareholders Litigation stands to streamline going private transactions by removing “the difference in the legal tests applied to negotiated mergers and tender offers involving controlling stockholders” and allowing “the transaction to be evaluated under the business judgment rule” following approval by a majority of the minority stockholders. In situations where the controlling stockholder is unwilling to condition the deal on majority of minority approval, Doug observes that the “entire fairness” review will presumably “remain as an alternative.”

Associate Rachel Krol assisted in the preparation of this article.