Opinion ID: 2165124
Heading Depth: 1
Heading Rank: 7

Heading: revlon claim

Text: Plaintiff argues that the Court of Chancery erred in holding that Revlon [39] was not triggered under the facts of this case because (i) Bancorp was seeking to sell itself and (ii) the Merger constituted a change in control. He contends that the board breached its  Revlon duties. [40] Defendants contend that Revlon was not implicated and, even if it were, they fulfilled their duties. They further argue that, even if their conduct fell short of the requirements of Revlon, Bancorp stockholders ratified any improprieties by voting in favor of the Merger. [41] The Court of Chancery held that Revlon was inapplicable under the facts of this case because the Merger did not involve a change in control. [42] We agree. [43] The Court need not apply enhanced scrutiny under the circumstances of this case. The directors of a corporation have the obligation of acting reasonably to seek the transaction offering the best value reasonably available to the stockholders, Paramount Communications, Inc. v. QVC Network, Inc., Del.Supr., 637 A.2d 34, 43 (1994), in at least the following three scenarios: (1) when a corporation initiates an active bidding process seeking to sell itself or to effect a business reorganization involving a clear break-up of the company, Paramount Communications, Inc. v. Time Inc., Del. Supr., 571 A.2d 1140, 1150 (1990) [ Time-Warner ]; (2) where, in response to a bidder's offer, a target abandons its long-term strategy and seeks an alternative transaction involving the break-up of the company, id.; or (3) when approval of a transaction results in a sale or change of control, QVC, 637 A.2d at 42-43, 47. In the latter situation, there is no sale or change in control when `[c]ontrol of both [companies] remain[s] in a large, fluid, changeable and changing market.' Id. at 47 (citation and emphasis omitted). [44] In the instant case, the events transpiring between May 28, 1992 (when the board rejected the May Proposal), and August 31, 1992 (when the board approved the Merger), and thereafter do not fit the circumstances requiring enhanced scrutiny of board action. Plaintiff emphasizes Time-Warner 's language seeking to sell itself' in arguing that Revlon was implicated, but that argument fails because, to fall within that category, the target must have initiate[d] an active bidding process. See Time, 571 A.2d at 1150. He also focuses on the board's subjective intent, a basis for enhancing director's duties which was rejected in Time-Warner. See id. at 1151. Alternatively, plaintiff argues that there was a sale or change in control of Bancorp because its former stockholders are now relegated to minority status in BoB, losing their opportunity to enjoy a control premium. As a continuing BoB stockholder, plaintiff's opportunity to receive a control premium is not foreclosed. [45] Thus, plaintiff's claim that enhanced scrutiny is required under the circumstances of this case lacks merit and the Court of Chancery did not err in so holding.