Opinion ID: 1497598
Heading Depth: 1
Heading Rank: 26

Heading: this appeal entire fairness affirmed principled balancing analysis

Text: In Cede II, this Court emphasized that the entire fairness standard is exacting and requires the board of directors to establish to the court's satisfaction that the transaction was the product of both fair dealing and fair price. Cede II, 634 A.2d at 361. On remand, the Court of Chancery re-evaluated the full record regarding the Technicolor board's conduct, in view of this Court's ruling that the directors were grossly negligent in failing to provide for a market test. In its entire fairness analysis, the Court of Chancery weighed that omission in the board process against its other findings of fact concerning the board's proper conduct. The Court of Chancery found itself unable to conclude that the MAF tender offer/merger was not a completely fair transaction. Cinerama, 663 A.2d at 1178. A finding of perfection is not a sine qua non in an entire fairness analysis. That is because the entire fairness standard is not even applied unless the presumption of the business judgment rule has been rebutted by evidence that the directors ... breached any one of the triads of their fiduciary duty  good faith, loyalty, or due care. Cede II, 634 A.2d at 361. Thus, perfection is not possible, or expected as a condition precedent to a judicial determination of entire fairness. Weinberger v. UOP, Inc., Del. Supr., 457 A.2d 701, 709 n. 7 (1983). The standard of entire fairness is also not in the nature of a litmus test that lend[s] itself to bright line precision or rigid doctrine. Nixon v. Blackwell, Del.Supr., 626 A.2d 1366, 1381 (1993). Conversely, in Nixon, this Court also stated that entire fairness cannot be ascertained by an unstructured or visceral process. Id. at 1378. Rather, it is a standard by which the Court of Chancery must carefully analyze the factual circumstances, apply a disciplined balancing test to its findings, and articulate the bases upon which it decides the ultimate question of entire fairness. Id. at 1373, 1378; accord Kahn v. Lynch Communication Systems, Inc., Del.Supr., 638 A.2d 1110, 1120 (1994). The record reflects that the Court of Chancery applied a disciplined balancing test, taking into account all relevant factors. See Nixon v. Blackwell, 626 A.2d at 1373. The Court of Chancery meticulously considered and weighed each aspect of fair dealing and fair price that the Technicolor board had properly discharged, in accordance with its fiduciary duties, against the Technicolor board's failure to test the market. After finding that the price obtained was the highest price reasonably available, the Court of Chancery concluded that the MAF transaction was entirely fair. Accord Shamrock Holdings, Inc. v. Polaroid Corp., Del.Ch., 559 A.2d 257, 275 (1989). That entire fairness determination, incorporating questions of credibility and based on more than forty-one days of live testimony and extensive expert witness presentations, must be accorded substantial deference on appellate review. Rosenblatt v. Getty Oil Co., 493 A.2d at 937. The record supports the Court of Chancery's entire fairness determination. Id. The Court of Chancery's determination is also the product of an orderly and logical deductive process. Id. Accordingly, this Court affirms the Court of Chancery's holding that the MAF transaction was entirely fair to the Technicolor shareholders.