Opinion ID: 1497598
Heading Depth: 1
Heading Rank: 17

Heading: Negotiation of Transaction

Text: This Court has held that arm's-length negotiation provides strong evidence that the transaction meets the test of fairness. Weinberger v. UOP. Inc., 457 A.2d at 709-10 n. 7; see also Rosenblatt v. Getty Oil Co., 493 A.2d at 937-38. The Court of Chancery's finding that the MAF transaction was the result of true, arm's-length negotiation, was undisturbed on appeal in Cede II. That finding is the law of the case. The Court of Chancery focused on the evidence ... relating to the course of negotiations. It noted that the Technicolor negotiators had effectively bargained with MAF to raise its offer price from an initial $15 per share to $23 per share. Furthermore, the Court of Chancery found that: [W]hile the board's failure to adequately canvass the market may arguably be consistent with the idea that they were committed, out of self-interest, to the transaction with Perelman, I do not make this inference. First of all it makes no economic sense given the stockholdings of Mr. Kamerman and Bjorkman. Moreover, the board made this decision on the advice of experienced corporate counsel. They thought they had negotiated a good transaction for the shareholders, and did not want to take steps which might jeopardize it. No improper motive, insofar as the evidence suggests, underlay this decision. In my opinion, the record strongly supports a finding that the directors were motivated by the best interests of the shareholders in negotiating the transaction with MAF. Cinerama, 663 A.2d at 1150 (footnotes omitted). The Court of Chancery concluded there is no cogent evidence that the Technicolor Board, in any material respect, put their interests ahead of the shareholders in negotiating the sale of the company. Id. at 1149. The board approval aspect of the Court of Chancery's entire fairness analysis, discussed hereafter, also took into consideration that the MAF transaction was not one that involved a board of directors that was dominated by a majority with a financial interest in the transaction, nor a majority with interests in conflict with the corporation's shareholders, nor dominated nor manipulated by a person with such interests. [26] The independence of the bargaining parties is a well-recognized touchstone of fair dealing. See Kahn v. Lynch Communication Systems, Inc., Del.Supr., 638 A.2d 1110 (1994). Accordingly, the Court of Chancery's finding that the Technicolor stockholders had the benefit of an independent and disinterested board is particularly probative evidence with respect to the negotiation of the MAF transaction as one aspect of the fair dealing component of entire fairness. Id.; see Citron v. E.I. Du Pont de Nemours & Co., Del.Ch., 584 A.2d 490, 504 (1990).