April 11, 2008
Delaware Chancery Court Doesn’t Meddle in Bear Stearns Deal (In Favor of New York Proceeding)
From Travis Laster: On Wednesday, Vice Chancellor Parsons of the Delaware Court of Chancery stayed an action filed in Delaware to enjoin the Bear Stearns-JPMorgan Chase merger, deferring to a parallel action in New York. Here is VC Parsons’ opinion.
The following quote says it all: “I have decided in the exercise of my discretion and for reasons of comity and the orderly and efficient administration of justice, not to entertain a second preliminary injunction motion on an expedited basis and thereby risk creating uncertainty in a delicate matter of great national importance.” There are references throughout the opinion to the involvement of the Federal Reserve and the Treasury Department in the deal.
The opinion does not shed any meaningful light on how the Court would view the exceptional lock-ups that are part of the deal package. The opinion does say that “the claims asserted in the Complaint only require the application of well-settled principles of Delaware law to evaluate the deal protections in the merger and the alleged breaches of fiduciary duty” (14). The Court then described the factual situation as sui generis (16). The Court concluded that the involvement of the federal players rendered the situation rare and unlikely to repeat – and therefore not one in which Delaware had a paramount interest.
On April 29th, join us for the webcast – “JPMorgan Chase/Bear Stearns: Splicing the Delaware Issues” – as Professors Elson, Davidoff and Cunningham analyze a host of novel provisions in the JPMorgan Chase/Bear Stearns merger agreement (as well as this – and any other – court opinion).