In re MFW Shareholders Litigation
Delaware Court of Chancery
2013 WL 2436341 (Del. Ch. 2013)
Ronald Perelman controlled MacAndrews & Forbes Holdings Inc. (MacAndrews & Forbes), which owned 43 percent of M & F Worldwide Corp. (MFW) and offered to buy out the remaining shareholders. MacAndrews & Forbes announced up front that any deal would require approval from an independent special committee and a majority of the minority shareholders. The committee retained its own advisors, met eight times, negotiated a higher price, and ultimately approved the merger; a fully informed vote of the minority shareholders then approved it too, with no disclosure failures. MFW's public shareholders sued anyway, arguing the entire fairness standard, not the business judgment rule, should govern the court's review.
Whether the business judgment rule applies to a going-private merger conditioned on the approvals of (1) an independent, adequately empowered special committee that fulfills its duty of care, and (2) an uncoerced, informed vote of a majority of the minority shareholders.