Corporate Alert: Delaware Supreme Court Reaffirmed Deference to the Board in Crafting a Change-of-Control Process and Addressed Limitations in Modifying Third-Party Contract Rights

Summary: In a recent decision, Chief Justice Strine, writing for the Delaware Supreme Court, sitting en banc, provided guidance on the proper application of Revlon and the limitations in the court’s power to issue a mandatory injunction, holding that: (i) under Revlon, a board of directors had wide latitude in crafting a change-of-control process; and (ii) even if a court found that the board did not fulfill its fiduciary duty in a change of control, the court could not “blue-pencil” the merger agreement in a way that reduced a third party’s rights absent wrongdoing on the part of such third party.