In its recent Synutra opinion, the Delaware Supreme Court clarified that take-private transactions will be reviewed under the business judgment rule, so long as the controlling stockholder commits to special committee approval and a majority of the minority vote before “substantive economic negotiations” take place, even if the controlling stockholder fails to self-disable in its initial written offer.
The opinion, written by Chief Justice Strine, explained that the touchstone of the analysis is whether there was any “economic horse trading” before the conditions were put in place.
This article was republished by the Harvard Law School Forum on Corporate Governance and Financial Regulation.