Glassman v. Unocal Exploration Corp.
Delaware Supreme Court
777 A.2d 242 (Del. 2001)
Unocal Corporation, owning 96 percent of Unocal Exploration Corporation (defendants), used Delaware's short-form merger statute -- which authorizes a 90-percent-plus parent to merge a subsidiary into itself simply by filing a certificate of ownership and merger -- to eliminate the minority shareholders and save the company money. Minority shareholders led by Glassman (plaintiffs) sued, alleging the parent and its directors breached their fiduciary duty of entire fairness to the minority shareholders; the Delaware Court of Chancery ruled for the defendants, and the plaintiffs appealed.
Whether a parent corporation effecting a short-form merger under Delaware's statute must establish entire fairness to the eliminated minority shareholders.