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action.27 Where the only choice for the minority stockholders is whether to accept the
merger consideration or seek appraisal, they must be given all the factual information
that is material to that decision.28 The Court of Chancery carefully considered plaintiffs’
disclosure claims and applied settled law in rejecting them. We affirm this aspect of the
appeal on the basis of the trial court’s decision.
III. Conclusion
Based on the foregoing, we affirm the Court of Chancery and hold that plaintiffs’ only
remedy in connection with the short-form merger of UXC into Unocal was appraisal.
Delaware Supreme Court Establishes Equitable Relief in Short Form Mergers
By Andrew J. Nussbaum, William Savitt, and Ryan A. McLeod*
The M&A Lawyer, July/August 2009, at 15
In a decision that could increase the litigation risk associated with short-form
mergers under 8 Del. C. § 253, the Delaware Supreme Court has ruled that where there
is a breach of the duty of disclosure in connection with a short-form merger, the
appropriate remedy is an automatic "quasi appraisal" action in which the minority
shareholders may adopt an "opt-out" class approach and need not escrow any of the
merger consideration they have already received.1
Under Delaware’s short-form merger statute, a parent corporation that owns at
least 90% of its subsidiary’s outstanding stock may summarily cash out the minority
holders by the unilateral adoption of a resolution setting forth the consideration to be
given. In 2001, the Supreme Court ruled that controlling stockholders owed no duty to
27 See Malone v. Brincat, Del. Supr., 722 A.2d 5 (1998) (No stockholder action was requested, but
Court recognized that even in such a case, directors breach duty of loyalty and good faith by knowingly
disseminating false information to stockholders.
28 McMullin v. Beran, Del. Supr., 765 A.2d 910 (2000).
* Andrew J. Nussbaum is a partner in the corporate department, William Savitt is a partner in the
litigation department, and Ryan A. McLeod is a litigation associate at Wachtell, Lipton, Rosen & Katz.
1 Berger v. Pubco Corp., [976 A.2d 132 (Del. 2009) – E.K.].
181
merger consideration or seek appraisal, they must be given all the factual information
that is material to that decision.28 The Court of Chancery carefully considered plaintiffs’
disclosure claims and applied settled law in rejecting them. We affirm this aspect of the
appeal on the basis of the trial court’s decision.
III. Conclusion
Based on the foregoing, we affirm the Court of Chancery and hold that plaintiffs’ only
remedy in connection with the short-form merger of UXC into Unocal was appraisal.
Delaware Supreme Court Establishes Equitable Relief in Short Form Mergers
By Andrew J. Nussbaum, William Savitt, and Ryan A. McLeod*
The M&A Lawyer, July/August 2009, at 15
In a decision that could increase the litigation risk associated with short-form
mergers under 8 Del. C. § 253, the Delaware Supreme Court has ruled that where there
is a breach of the duty of disclosure in connection with a short-form merger, the
appropriate remedy is an automatic "quasi appraisal" action in which the minority
shareholders may adopt an "opt-out" class approach and need not escrow any of the
merger consideration they have already received.1
Under Delaware’s short-form merger statute, a parent corporation that owns at
least 90% of its subsidiary’s outstanding stock may summarily cash out the minority
holders by the unilateral adoption of a resolution setting forth the consideration to be
given. In 2001, the Supreme Court ruled that controlling stockholders owed no duty to
27 See Malone v. Brincat, Del. Supr., 722 A.2d 5 (1998) (No stockholder action was requested, but
Court recognized that even in such a case, directors breach duty of loyalty and good faith by knowingly
disseminating false information to stockholders.
28 McMullin v. Beran, Del. Supr., 765 A.2d 910 (2000).
* Andrew J. Nussbaum is a partner in the corporate department, William Savitt is a partner in the
litigation department, and Ryan A. McLeod is a litigation associate at Wachtell, Lipton, Rosen & Katz.
1 Berger v. Pubco Corp., [976 A.2d 132 (Del. 2009) – E.K.].
181
