recent developments in delaware corporate law - Greenberg Traurig ...

180 Delaware Law Review Volume 7:2
With respect to the allegedly misplaced reliance on Roth to negotiate the transaction,
the court concluded that the MONY board’s reliance on Roth was both “reasonable and
well-founded” under the circumstances, given that: (i) it was the MONY board, not Roth,
that determined to sell the company and trigger the CICs under which Roth stood to gain;
(ii) the MONY “[b]oard actively supervised Roth’s negotiations” with AXA; and (iii) the
MONY “[b]oard repeatedly demonstrated its independence and control.” 10 Accordingly,
the court, citing its holding in Pennaco, concluded that “[a] board appropriately can rely
on its own CEO to conduct negotiations, and the involvement of an investment banker
is not required.” 11
Citing to both Chancery and Supreme Court precedents, the court also rejected
plaintiffs’ Revlon claim. First, the stockholder-plaintiffs alleged that the MONY board
erred in deciding to forego an auction of MONY in favor of a post-agreement market
check. Quoting Pennaco, the court reiterated that “the mere fact that [a] board decided
to focus on negotiating a favorable price with [one potential acquiror] and not to seek
out other bidders is not one that alone supports a breach of fiduciary duty claim.” 12 The
court concluded that the MONY board acted reasonably in determining to proceed with
a post-agreement market check rather than conduct an auction in light of the following
factors: (i) an earlier attempt by another insurance company to conduct a public auction
that ultimately failed harshly affected that company’s business and its stock price; (ii) an
auction would jeopardize MONY’s career agency force; (iii) in an auction competitors
would have access to MONY information and its career agents; and (iv) the permissibility
of a post-agreement market check. 13
Second, the plaintiffs argued that the MONY board did not reasonably conclude
that the merger agreement provided the “best transaction reasonably available” as required
by Revlon. Again, the court rejected the plaintiffs’ arguments, recognizing that the “financially
sophisticated and knowledgeable” board members were regularly briefed by Roth on
strategic alternatives, industry developments, and alternatives to the merger agreement,
10. Id. at 20.
11. Id. (citing Pennaco, 787 A.2d at 706-07).
12. Id. at 21 (quoting Pennaco, 787 A.2d at 706).
13. Id. at 21.