DealLawyers.com Blog

August 20, 2007

VC Strine: Application of “Compelling Justification” Standard of Judicial Review

From John Grossbauer: Last week, Vice Chancellor Strine of the Delaware Chancery Court – in Mercier v. Inter-Tel (Delaware) Inc. – declined to enjoin a merger that was approved by stockholders at a rescheduled stockholder meeting. The originally scheduled meeting had been postponed shortly before it was to be convened, and the Court found the board was aware that the merger likely would be voted down when it approved the postponement.

In finding no probability of success on the merits, the Vice Chancellor discusses a proposal for the Blasius standard to be “reformulated”. Nonetheless, the Court, applying the traditional Blasius language, found the directors had a “compelling justification – the protection of the stockholders’ financial interests – for a short postponement to allow more time for deliberation.” It’s the first time a court has found a “compelling justification” in a Blasius case.

We have posted a copy of the opinion in our “M&A Litigation” Portal.