Court Opinion

ID: 9700363
Source: CourtListenerOpinion
Date Created: 2023-08-25 21:24:01.424636+00
Date Added: 2024-06-11T18:21:07.979179
License: Public Domain

VEASEY, Chief Justice,
with whom STEELE, Justice, joins dissenting.
The beauty of the Delaware corporation law, and the reason it has worked so well for stockholders, directors and officers, is that the framework is based on an enabling statute with the Court of Chancery and the Supreme Court applying principles of fiduciary duty in a common law mode on a case-by-case basis. Fiduciary duty cases are inherently fact-intensive and, therefore, unique. This case is unique in two important respects. First, the peculiar facts presented render this case an unlikely candidate for substantial repetition. Second, this is a rare 3-2 split decision of the Supreme Court.90
*940In the present case, we are faced with a merger agreement and controlling stockholders’ commitment that assured stockholder approval of the merger before the emergence of a subsequent transaction offering greater value to the stockholders. This does not adequately summarize the unique facts before us, however. Reference is made to the Vice Chancellor’s opinion and the factual summary in the Majority Opinion that adopts the Vice Chancellor’s findings.91
The process by which this merger agreement came about involved a joint decision by the controlling stockholders and the board of directors to secure what appeared to be the only value-enhancing transaction available for a company on the brink of bankruptcy. The Majority adopts a new rule of law that imposes a prohibition on the NCS board’s ability to act in concert with controlling stockholders to lock up this merger. The Majority reaches this conclusion by analyzing the challenged deal protection measures as isolated board actions. The Majority concludes that the board owed a duty to the NCS minority stockholders to refrain from acceding to the Genesis demand for an irrevocable lock-up notwithstanding the compelling circumstances confronting the board and the board’s disinterested, informed, good faith exercise of its business judgment.
Because we believe this Court must respect the reasoned judgment of the board of directors and give effect to the wishes of the controlling stockholders, we respectfully disagree with the Majority’s reasoning that results in a holding that the confluence of board and stockholder action constitutes a breach of fiduciary duty. The essential fact that must always be remembered is that this agreement and the voting commitments of Outcalt and Shaw concluded a lengthy search and intense negotiation process in the context of insolvency and creditor pressure where no other viable bid had emerged. Accordingly, we endorse the Vice Chancellor’s well-reasoned analysis that the NCS board’s action before the hostile bid emerged was within the bounds of its fiduciary duties under these facts.
We share with the Majority and the independent NCS board of directors the motivation to serve carefully and in good faith the best interests of the corporate enterprise and, thereby, the stockholders of NCS. It is now known, of course, after the case is over, that the stockholders of NCS will receive substantially more by tendering their shares into the topping bid of Omnicare than they would have received in the Genesis merger, as a result of the post-agreement Omnicare bid and the in-junctive relief ordered by the Majority of this Court. Our jurisprudence cannot, however, be seen as turning on such ex post felicitous results. Rather, the NCS board’s good faith decision must be subject to a real-time review of the board action before the NCS-Genesis merger agreement was entered into.

An Analysis of the Process Leading to the Lock-up Reflects a Quintessential, Disinterested and Informed Board Decision Reached in Good Faith

The Majority has adopted the Vice Chancellor’s findings and has assumed ar-guendo that the NCS board fulfilled its duties of care, loyalty, and good faith by entering into the Genesis merger agreement. Indeed, this conclusion is indisputa*941ble on this record. The problem is that the Majority has removed from their proper context the contractual merger protection provisions. The lock-ups here cannot be reviewed in a vacuum. A court should review the entire bidding process to determine whether the independent board’s actions permitted the directors to inform themselves of their available options and whether they acted in good faith.92
Going into negotiations with Genesis, the NCS directors knew that, up until that time, NCS had found only one potential bidder, Omnieare. Omnieare had refused to buy NCS except at a fire sale price through an asset sale in bankruptcy. Om-nicare’s best proposal at that stage would not have paid off all creditors and would have provided nothing for stockholders. The Noteholders, represented by the Ad Hoc Committee, were willing to oblige Om-nicare and force NCS into bankruptcy if Omnieare would pay in full the NCS debt. Through the NCS board’s efforts, Genesis expressed interest that became increasingly attractive. Negotiations with Genesis led to an offer paying creditors off and conferring on NCS stockholders $24 million- — an amount infinitely superior to the prior Omnieare proposals.
But there was, understandably, a sine qua non. In exchange for offering the NCS stockholders a return on their equity and creditor payment, Genesis demanded certainty that the merger would close. If the NCS board would not have acceded to the Section 251(c) provision, if Outcalt and Shaw had not agreed to the voting agreements and if NCS had insisted on a fiduciary out, there would have been no Genesis deal! Thus, the only value-enhancing transaction available would have disappeared. NCS knew that Omnieare had spoiled a Genesis acquisition in the past,93 and it is not disputed by the Majority that the NCS directors made a reasoned decision to accept as real the Genesis threat to walk away.94
When Omnieare submitted its conditional eleventh-hour bid, the NCS board had to weigh the economic terms of the proposal against the uncertainty of completing a deal with Omnieare.95 Importantly, because Omnicare’s bid was conditioned on its satisfactorily completing its due diligence review of NCS, the NCS board saw this as a crippling condition, as did the Ad Hoc Committee. As a matter of business judgment, the risk of negotiating with Om-nicare and losing Genesis at that point outweighed the possible benefits.96 The *942lock-up was indisputably a sine qua non to any deal with Genesis.
A lock-up permits a target board and a bidder to “exchange certainties.”97 Certainty itself has value. The acquirer-may pay a higher price for the target if the acquirer is assured consummation of the transaction. The target company also benefits from the certainty of completing a transaction with a bidder because losing an acquirer creates the perception that a target is damaged goods, thus reducing its value.
This Court approved the recognition by the Court of Chancery of the value of certainty in Rand v. Western Air Lines.98 The Court of Chancery upheld the decision of the board of Western Air Lines to grant its only bidder a stock option agreement to acquire 30% of Western’s stock for an amount representing the closing price on the last trading day before execution of the merger agreement.99 The Court recognized that the lock-up agreement “fore-elose[d] further bidding,” but noted that the board had canvassed the market, found only one party willing to acquire Western, and made a decision calculated to maximize stockholder value by pursuing “the only viable prospect that remained.”100 The Court also noted that, in return for the lock-up, the acquirer agreed to limit its own “outs” that would prevent consummation of the merger. The merging parties, then, “exchanged certainties” by locking up the deal, which was approved by the Court of Chancery and affirmed by this Court.101
While the present case does not involve an attempt to hold on to only one interested bidder, the NCS board was equally concerned about “exchanging certainties” with Genesis. If the creditors decided to force NCS into bankruptcy, which could have happened at any time as NCS was unable to service its obligations, the stockholders would have received nothing. The NCS board also did not know if the NCS business prospects would have declined again, leaving NCS less attractive to other bidders, including Omnicare, which could have changed its mind and again insisted on an asset sale in bankruptcy.
Situations will arise where business realities demand a lock-up so that wealth-enhancing transactions may go forward. Accordingly, any bright-line rule prohibiting lock-ups could, in circumstances such as these, chill otherwise permissible conduct.

Our Jurisprudence Does Not Compel This Court to Invalidate the Joint Action of the Board and the Controlling Stockholders

The Majority invalidates the NCS board’s action by announcing a new rule that represents an extension of our jurisprudence. That new rule can be narrowly stated as follows: A merger agreement entered into after a market search, before any prospect of a topping bid has emerged, which locks up stockholder approval and does not contain a “fiduciary out” provision, is per se invalid when a later significant topping bid emerges. As we have noted, this bright-line, per se rule would apply regardless of (1) the circumstances leading up to the agreement and (2) the fact that stockholders who control voting *943power had irrevocably committed themselves, as stockholders, to vote for the merger. Narrowly stated, this new rule is a judicially-created “third rail” that now becomes one of the given “rules of the game,” to be taken into account by the negotiators and drafters of merger agreements. In our view, this new rule is an unwise extension of existing precedent.
Although it is debatable whether Unocal applies — and we believe that the better rule in this situation is that the business judgment rule should apply102 — we will, nevertheless, assume arguendo — as the Vice Chancellor did — that Unocal applies. Therefore, under Unocal the NCS directors had the burden of going forward with the evidence to show that there was a threat to corporate policy and effectiveness and that their actions were reasonable in response to that threat. The Vice Chancellor correctly found that they reasonably perceived the threat that NCS did not have a viable offer from Omnicare — or anyone else — to pay off its creditors, cure its insolvency and provide some payment to stockholders. The NCS board’s actions — as the Vice Chancellor correctly held — were reasonable in relation to the threat because the Genesis deal was the “only game in town,” the NCS directors got the best deal they could from Genesis and — but-for the emergence of Genesis on the scene — there would have been no viable deal.
The Vice Chancellor held that the NCS directors satisfied Unocal. He even held that they would have satisfied Revlon, if it had applied, which it did not. Indeed, he concluded — based on the undisputed record and his considerable experience — that: “The overall quality of testimony given by the NCS directors is among the strongest this court has ever seen. All four NCS directors were deposed, and each deposition makes manifest the care and attention given to this project by every member of the board.”103 We agree fully with the Vice Chancellor’s findings and conclusions, and we would have affirmed the judgment of the Court of Chancery on that basis. . In our view, the Majority misapplies the Unitrin concept of “coercive and preclu-sive” measures to preempt a proper proportionality balancing. Thus, the Majority asserts that “in applying enhanced judicial scrutiny to defensive devices designed to protect a merger agreement, ... a court must ... determine that those measures are not preclusive or coercive....”104 Here, the deal protection measures were not adopted unilaterally by the board to fend off an existing hostile offer that *944threatened the corporate policy and effectiveness of NCS.105 They were adopted because Genesis — the “only game in town” — would not save NCS, its creditors and its stockholders without these provisions.
The Majority — incorrectly, in our view— relies on Unitrin to advance its analysis. The discussion of “draconian” measures in Unitrin dealt with unilateral board action, a repurchase program, designed to fend off an existing hostile offer by American General.106 In Unitrin we recognized the need to police preclusive and coercive actions initiated by the board to delay or retard an existing hostile bid so as to ensure that the stockholders can benefit from the board’s negotiations with the bidder or others and to exercise effectively the franchise as the ultimate check on board action.107 Unitrin polices the effect of board action on existing tender offers and proxy contests to ensure that the board cannot permanently impose its will on the stockholders, leaving the stockholders no recourse to their voting rights.108
The very measures the Majority cites as “coercive” were approved by Shaw and Outcalt through the lens of their independent assessment of the merits of the transaction. The proper inquiry in this case is whether the NCS board had taken actions that “have the effect ¡of causing the stockholders to vote in favor of the proposed transaction for some reason other than the merits of that transaction.”109 Like the termination fee upheld as a valid liquidated damages clause against a claim of coercion in Brazen v. Bell Atlantic Corp., the deal protection measures at issue here were “an integral part of the merits of 'the transaction” as the NCS board struggled to secure — and did secure — the only deal available.110
Outcalt and Shaw were fully informed stockholders. As the NCS controlling stockholders, they made an informed choice to commit their voting power to the merger. The minority stockholders were deemed to know that when controlling stockholders have 65% of the vote they can approve a merger without the need for the minority votes. Moreover, to the extent a *945minority stockholder may have felt “coerced” to vote for the merger, which was already a fait accompli, it was a meaningless coercion — or no coercion at all — because the controlling votes, those of Outcalt and Shaw, were already “cast.” Although the fact that the controlling votes were committed to the merger “precluded” an overriding vote against the merger by the Class A stockholders, the pejorative “preclusive” label applicable in a Unitrin fact situation has no application here. Therefore, there was no meaningful minority stockholder voting decision to coerce.
In applying Unocal scrutiny, we believe the Majority incorrectly preempted the proportionality inquiry. In our view, the proportionality inquiry must account for the reality that the contractual measures protecting this merger agreement were necessary to obtain the Genesis deal. The Majority has not demonstrated that the director action was a disproportionate response to the threat posed. Indeed, it is clear to us that the board action to negotiate the best deal reasonably available with the only viable merger partner (Genesis) who could satisfy the creditors and benefit the stockholders, was reasonable in relation to the threat, by any practical yardstick.

An Absolute Lock-up is Not a Per Se Violation of Fiduciary Duty

We respectfully disagree with the Majority’s conclusion that the NCS board breached its fiduciary duties to the Class A stockholders by failing to negotiate a “fiduciary out” in the Genesis merger agreement. What is the practical import of a “fiduciary out?” It is a contractual provision, articulated in a manner to be negotiated, that would permit the board of the corporation being acquired to exit without breaching the merger agreement in the event of a superior offer.
In this case, Genesis made it abundantly clear early on that it was willing to negotiate a deal with NCS but only on the condition that it would not be a “stalking horse.” Thus, it wanted to be certain that a third party could not use its deal with NCS as a floor against which to begin a bidding war. As a result of this negotiating position, a “fiduciary out” was not acceptable to Genesis. The Majority Opinion holds that such a negotiating position, if implemented in the agreement, is invalid per se where there is an absolute lock-up. We know of no authority in our jurisprudence supporting this new rule, and we believe it is unwise and unwarranted.
The Majority relies on our decision in QVC to assert that the board’s fiduciary duties prevent the directors from negotiating a merger agreement without providing an escape provision. Rebanee on QVC for this proposition, however, confuses our statement of a board’s responsibilities when the directors confront a superior transaction and turn away from it to lock up a less valuable deal with the very different situation here, where the board committed itself to the only value-enhancing transaction available. The decision in QVC is an extension of prior decisions in Revlon and Mills that prevent a board from ignoring a bidder who is willing to match and exceed the favored bidder’s offer.111 The Majority’s application of “continuing fiduciary duties” here is a further extension of this concept and thus permits, wrongly in our view, a court to second-guess the risk and return analysis the board must make to weigh the value of the only viable transaction against the prospect of an offer that has not materiahzed.
The Majority also mistakenly relies on our decision in QVC to support the notion that the NCS board should have retained a fiduciary out to save the minority stock*946holder from Shaw’s and Outcalt’s voting agreements. Our reasoning in QVC, which recognizes that minority stockholders must rely for protection on the fiduciary duties owed to them by directors,112 does not create a special duty to protect the minority stockholders from the consequences of a controlling stockholder’s ultimate decision unless the controlling stockholder stands on both sides of the transaction,113 which is certainly not the case here. Indeed, the discussion of a minority stockholders’ lack of voting power in QVC notes the importance of enhanced scrutiny in change of control transactions precisely because the minority stockholders’ interest in the newly merged entity thereafter will hinge on the course set by the controlling stockholder.114 In QVC, Sumner Redstone owned 85% of the voting stock of Viacom, the surviving corporation.115 Unlike the stockholders who are confronted with a transaction that will relegate them to a minority status in the corporation, the Class A stockholders of NCS purchased stock knowing that the Charter provided Class B stockholders voting control.

Conclusion

It is regrettable that the Court is split in this important case. One hopes that the Majority rule announced here — though clearly erroneous in our view — will be interpreted narrowly and will be seen as sui generis.116 By deterring bidders from engaging in negotiations like those present here and requiring that there must always be a fiduciary out, the universe of potential bidders who could reasonably be expected to benefit stockholders could shrink or disappear. Nevertheless, if the holding is confined to these unique facts, negotiators may be able to navigate around this new hazard.
Accordingly, we respectfully dissent.
STEELE, Justice,
dissenting.
I respectfully dissent from the majority opinion, join the Chief Justice’s dissent in all respects and dissent separately in order to crystallize the central focus of my objection to the majority view.
I would affirm the Vice Chancellor’s holding denying injunctive relief.
Here the board of directors acted selflessly pursuant to a careful, fair process and determined in good faith that the benefits to the stockholders and corporation flowing from a merger agreement containing reasonable deal protection provisions outweigh any speculative benefits that might result from entertaining a putative higher offer. A court asked to examine the decisionmaking process of the board should decline to interfere with the consummation and execution of an otherwise valid contract.
In my view, the Vice Chancellor’s unimpeachable factual findings preclude further judicial scrutiny of the NCS board’s business judgment that the hotly negotiated terms of its merger agreement were necessary in order to save the company from financial collapse, repay creditors and provide some benefits to NCS stockholders.
A concurring dissent is not a useful mechanism for restating the facts the Vice Chancellor found significant, particularly *947when the majority accepts those facts and a highly persuasive, compelling dissent, places them squarely in the correct perspective. What is far less clear to me is how the majority can adopt those facts and then conclude that the NCS board breached any fiduciary duty to NCS’ minority stockholders simply by endorsing a voting agreement between the majority stockholders that locked up a carefully negotiated and essential merger agreement with Genesis.
In my opinion, Delaware law mandates deference under the business judgment rule to a board of directors’ decision that is free from self interest, made with due care and in good faith.
Under Delaware law, the business judgment rule is the offspring of the fundamental principle, codified in § 141(a), that the business and affairs of a Delaware corporation are managed by or under its board of directors.... The business judgment rule exists to protect and promote the full and free exercise of the managerial power granted to Delaware directors.117
Importantly, Smith v. Van Gorkom, correctly casts the focus on any court review of board action challenged for alleged breach of the fiduciary duty of care “only upon the basis of the information then reasonably available to the directors and relevant to their decision....”118 Though criticized particularly for the imposition of personal liability on directors for a breach of the duty of care, Van Gorkom still stands for the importance of recognizing the limited circumstances for court intervention and the importance of focusing on the timing of the decision attacked.
The majority concludes that Unocal’s intermediate standard of review compels judicial interference to determine whether contract terms, that the majority refers to at various times as “deal protection devices,” “defensive devices,” “defensive measures” or “structural safety devices,” are preclusive and coercive. The majority’s conclusion substantially departs from both a common sense appraisal of the contextual landscape of this case and Delaware case law applying the Unocal standard.
In the factual context of this case, the NCS board had thoroughly canvassed the market in an attempt to find an acquirer, save the company, repay creditors and provide some financial benefit to stockholders. They did so in the face of silence, tepid interest to outright hostility from Omnieare. The only bona fide, credible merger partner NCS could find during an exhaustive process was Genesis, a company that had experienced less than desirable relations with Omnieare in the past. Small wonder NCS’ only viable merger partner made demands and concessions to acquire contract terms that enhanced assurance that the merger would close. The NCS board agreed to lock up the merger with contractual protection provisions in order to avoid the prospect of Genesis walking away from the deal leaving NCS in the woefully undesirable position of negotiating with a company that had worked for months against NCS’ interests by negotiating with NCS’ creditors. Those negotiations suggested no regard for NCS’ stockholders’ interests, and held out only the hope of structuring a purchase of NCS in a bankruptcy environment.
*948The contract terms that NCS’ board agreed to included no insidious, camouflaged side deals for the directors or the majority stockholders nor transparent provisions for entrenchment or control premiums. At the time the NCS board and the majority stockholders agreed to a voting lockup, the terms were the best reasonably available for all the stockholders, balanced against a genuine risk of no deal at all. The cost benefit analysis entered into by an independent committee of the board, approved by the full board and independently agreed to by the majority stockholders cannot be second guessed by courts with no business expertise that would qualify them to substitute their judgment for that of a careful, selfless board or for majority stockholders who had the most significant economic stake in the outcome.
We should not encourage proscriptive rules that invalidate or render unenforceable precommitment strategies negotiated between two parties to a contract who will presumably, in the absence of conflicted interest, bargain intensely over every meaningful provision of a contract after a careful cost benefit analysis. Where could this plain common sense approach be more wisely invoked than where a board, free of conflict, fully informed, supported by the equally conflict-free holders of the largest economic interest in the transaction, reaches the conclusion that a voting lockup strategy is the best course to obtain the most benefit for all stockholders?
This fundamental principle of Delaware law so eloquently put in the Chief Justice’s dissent, is particularly applicable here where the NCS board had no alternative if the company were to be saved. If attorneys counseling well motivated, careful, and well-advised boards cannot be assured that their clients’ decision — sound at the time but later less economically beneficial only because of post-decision, unforeseeable events — will be respected by the courts, Delaware law, and the courts that expound it, may well be questioned. I would not shame the NCS board, which acted in accordance with every fine instinct that we wish to encourage, by invalidating their action approving the Genesis merger because they failed to insist upon a fiduciary out. I use “shame” here because the majority finds no breach of loyalty or care but nonetheless sanctions these directors for their failure to insist upon a fiduciary out as if those directors had no regard for the effect of their otherwise disinterested, careful decision on others.119 The majority seeks to deter future boards from similar conduct by declaring that agreements negotiated under similar circumstances will be unenforceable.
Delaware corporate citizens now face the prospect that in every circumstance, boards must obtain the highest price, even if that requires breaching a contract entered into at a time when no one could have reasonably foreseen a truly “Superior Proposal.” The majority’s proscriptive rule limits the scope of a board’s cost benefit analysis by taking the bargaining chip of foregoing a fiduciary out “off the table” in all circumstances. For that new principle to arise from the context of this case, when Omnicare, after striving to buy NCS on the cheap by buying off its creditors, slinked back into the fray, reversed its historic antagonistic strategy and offered a conditional “Superior Proposal” seems entirely counterintuitive.
The majority declares that a fairly negotiated exchange of consideration is invalid and unenforceable on the theory that its *949terms preclude minority stockholders from accepting a superior alternative or that it coerces them into accepting an inferior deal while presupposing that the objectionable terms of NCS’ agreement with Genesis are “defensive measures.”120 The majority equates those contract provisions with measures affirmatively adopted to prevent a third party bidder from frustrating a deal with an acquirer with which management may choose to deal without being fully informed or for their own self interest. In effect, the majority has adopted the “duck” theory of contract interpretation. In my view, just as all ducks have their season and the wary hunter carefully scans the air to determine which duck may and which may not be shot at a given time on a certain day, the same holds true for distinguishing between contract provisions that could in another context be deemed truly defensive measures demanding enhanced scrutiny by a court. When certain, or when in doubt that the “duck” is not in season, courts, like prudent waterfowlers, should defer.
I believe that the absence of a suggestion of self-interest or lack of care compels a court to defer to what is a business judgment that a court is not qualified to second guess. However, I recognize that another judge might prefer to view the reasonableness of the board’s action through the Unocal prism before deferring.121 Some flexible, readily discernable standard of review must be applied no matter what it may be called. Here, one deferring or one applying Unocal scrutiny would reach the same conclusion. When a board agrees rationally, in good faith, without conflict and with reasonable care to include provisions in a contract to preserve a deal in the absence of a better one, their business judgment should not be second-guessed in order to invalidate or declare unenforceable an otherwise valid merger agreement. The fact that majority stockholders free of conflicts have a choice and every incentive to get the best available deal and then make a rational judgment to do so as well neither unfairly impinges upon minority shareholder choice or the concept of a shareholder “democracy” nor has it any independent significance bearing on the reasonableness of the board’s separate and distinct exercise of judgment.
I cannot follow the majority’s reliance on Paramount v. QVC.122 and Paramount Communications v. Time.123 QVC, is controlled by the facts of the underlying transaction. The Paramount board did not canvass the market, negotiated exclusively with Viacom despite QVC’s announced interest and refused to give QVC an opportunity to top the Viacom offer. Arguably, the Paramount board shunned QVC’s higher offer and then turned to lock up a deal with Viacom less valuable to stockholders along with an unreasonable grant of a right to exercise a stock option of unlimit*950ed value. QVC does not, in my view, support a policy of decrying and then proscribing precommitment strategies generally on the supposition that in every fact situation they “disable” a board from an efficient breach.
Paramount v. Time discussed the “original” and the “revised” Time-Warner agreements. Both courts reviewing the “original” concluded that it resulted from an “exhaustive appraisal of Time’s future as a corporation” and that the “Time board’s decision” to enter into the original agreement (containing deal preservation provisions) with Warner “was entitled to the protection of the business judgment rule.”124 In my view, the strategic policy decision protected in the original Time-Warner agreement cannot, like the NCS-Genesis merger of necessity here, be considered a responsive “defensive measure” compelling a Unocal analysis. By contrast, both courts concluded that the “revised” agreement was “defense-motivated” and as a result “Unocal alone applies to determine whether the business judgment rule attaches.”125
Lockup provisions attempt to assure parties that have lost business opportunities and incurred substantial costs that their deal will close. I am concerned that the majority decision will remove the certainty that adds value to any rational business plan. Perhaps transactions that include “force-the-vote” and voting agreement provisions that make approval a foregone conclusion will be the only deals invalidated prospectively. Even so, therein lies the problem. Instead of thoughtful, retrospective, restrained flexibility focused on the circumstances existing at the time of the decision, have we now moved to a bright line regulatory alternative?
For the majority to articulate and adopt an inflexible rule where a board has discharged both its fiduciary duty of loyalty and care in good faith seems a most unfortunate turn. Does the majority mean to signal a mandatory, bright line, per se efficient breach analysis ex post to all challenged merger agreements? Knowing the majority’s general, genuine concern to do equity, I trust not. If so, our courts and the structure of our law that we have strived so hard to develop and perfect will prevent a board, responsible under Delaware law to make precisely the kind of decision made here, in good faith, free of self interest, after exercising scrupulous due care from honoring its contract obligations.
Therefore, I respectfully dissent.

. Split decisions by this Court, especially in the field of corporation law, are few and far between. One example is our decision in Smith v. Van Gorkom, 488 A.2d 858 (Del.1985), where only three Justices supported reversing the Court of Chancery’s decision. As Justice Holland and David Skeel recently noted, while our decisionmaking process fosters consensus, dissenting opinions "illustrate *940that principled differences of opinion about the law [are] ... never compromised for the sake of unanimity.” Randy J. Holland & David A. Skeel, Jr., Deciding Cases Without Controversy, 5 Del. L.Rev. 115, 118 (2002).

. Majority Opinion at 920-27.

. See, e.g., Malpiede v. Townson, 780 A.2d 1075, 1089 (Del.2001) (concluding that the board made an informed decision to refrain from returning to a rival bidder to solicit another offer because the board conducted a “lengthy sale process" that spanned one year).

. Majority Opinion at 923.

. In Citron v. Fairchild Camera & Instrument Corp., we noted that "whether the constraints are self-imposed or attributable to bargaining tactics of an adversary seeking a final resolution of a belabored process must be considered” in analyzing the target’s decision to accept an ultimatum from a bidder. 569 A.2d 53, 67 (Del.1989). Based on Genesis's prior dealings with Omnieare, NCS had good reason to take the Genesis ultimatum seriously.

. See Mills Acquisition Co. v. Macmillan, Inc., 559 A.2d 1261, 1282 n. 29 ("In assessing the bid and the bidder's responsibility, a board may consider, among various proper factors ... the risk of nonconsummation....”); Citron, 569 A.2d at 68-69 ("We will not hold a target board of predominantly disinterested directors liable for allegedly failing to exhibit due care when the bidder does not provide the target board with a definitive bid.”).

. See RJR Nabisco, Inc. S’holders Litig., 1989 WL 7036 at *19 (Del.Ch.). In RJR, the Court of Chancery held that the RJR Nabisco board could justifiably accept the highest bid it received from one bidder, KKR, rather than inquire about a higher offer from the other suitor, the management group, because KKR might have withdrawn its bid. Id. at *19.

. See Rand v. Western Air Lines, 1994 WL 89006 at *6 (Del.Ch.).

. 1994 WL 89006 (Del.Ch.) aff'd 659 A.2d 228 (Del.1995).

. Id. at *3.

. Id. at *7.

. Id. at *6 ("Western gained a substantial benefit for its stockholders by keeping the only party expressing any interest at the table while achieving its own assurances that the transaction would be consummated.”).

.The basis for the Unocal doctrine is the "omnipresent specter” of the board's self-interest to entrench itself in office. Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946, 954 (Del. 1985). NCS was not plagued with a specter of self-interest. Unlike the Unocal situation, a hostile offer did not arise here until after the market search and the locked-up deal with Genesis.
The Unocal doctrine applies to unilateral board actions that are defensive and reactive in nature. Thus, a Unocal analysis was necessary in Paramount Communications v. Time Inc. because Time and Warner restructured their original transaction from a merger to an acquisition in response to the Paramount bid. 571 A.2d 1140, 1148 (Del. 1989). In Time, the original Time-Warner stock-for-stock merger, which this Court held was entitled to the presumption of the business judgment rule, was jettisoned by the parties in the face of Paramount’s topping bid. Id. at 1152. The merger was replaced with a new transaction which was an all cash tender offer by Time to acquire 51% of the Warner stock. It was the revised agreement, not the original merger agreement, that was found to be "defense-motivated” and subject to Unocal. Id.

. In re NCS Healthcare, Inc. S'holders Litig., 2002 WL 31720732 (Del.Ch.) ("Chancery, Fiduciary Duty Opinion") at *15 n. 46.

. Majority Opinion at 932 (emphasis supplied.).

.The Majority states that our decisions in Williams v. Geier and Stroud v. Grace do not hold that "the operative effect of a voting agreement must be disregarded per se when a Unocal analysis is applied to a comprehensive and combined merger defense plan." Majority Opinion at 934. In Stroud v. Grace, however, we noted that "The record clearly indicates, and [plaintiff] ... concedes, that over 50% of the outstanding shares of ... [the corporation] are under the direct control of [the defendants]_ These directors controlled the corporation in fact and law. This obviates any threat contemplated by Unocal. ...” 606 A.2d 75, 83 (Del.1992) (emphasis supplied). According to Stroud, then, Shaw’s and Outcalt's decision to enter into the voting agreements should not be subject to a Unocal analysis because they controlled the corporation "in fact and law.” Id. Far from a breach of duty, the joint action of the stockholders and directors here represents "the highest and best form of corporate democracy.” Williams v. Geier, 671 A.2d 1368, 1381 (Del.1996).

. Unitrin, Inc. v. American General Corp., 651 A.2d 1361, 1370 (Del.1995).

. Id. at 1379 ("We begin our examination of Unitrin’s Repurchase Program mindful of the special import of protecting the shareholder's franchise within Unocal’s requirement that a defensive measure be reasonable and proportionate.”) (citation omitted).

. Id. at 1383 (upholding the Unitrin board’s defensive measures because the board actions "would not appear to have a preclusive effect upon American General's ability successfully to marshal enough shareholder votes to win a proxy contest.”).

. Geier, 671 A.2d at 1382-83 (citations omitted).

. 695 A.2d 43, 50 (Del. 1997).

. Paramount Communications v. QVC Network, 637 A.2d 34, 49-50 (Del.1993).

. 637 A.2d at 47.

. See Bershad v. Curtiss-Wright Corp., 535 A.2d 840, 845 (Del.1987) (noting that absent fiduciary duties arising from standing on both sides of a transaction,'"stockholders in Delaware corporations have a right to control and vote their shares in their own interest.").

. QVC, 637 A.2d at 47-48.

. Id. at 38.

. Importantly, we decide only the case before us. QVC, 637 A.2d at 51.

. Smith v. Van Gorkom, 488 A.2d 858, 872 (Del.1985).

. Id. at 874; see also R. Franklin Balotti and A. Gilchrist Sparks, III, Deal-Protection Measures and the Merger Recommendation, 96 Nw. U.L.Rev. 467 (2002) (an article presaging the conflict between appropriate discharge of fiduciary duty and the sanctity of contract provisions fairly negotiated).

. For a more expansive and thoughtful explanation of the concept of “shaming” in the context of corporate law, see David A. Skeel, Jr., Symposium Norms & Corporate Law: Shaming in Corporate Law, 149 U. Pa. L.Rev. 1811 (2001).

. The majority refers to "defensive measures,” “deal protection devices,” "structural safety devices” and "defensive devices” as interchangeable, each demanding heightened scrutiny. "Of course, the mere fact that the court calls a 'duck' a ‘duck’ does not mean that such defense provisions will not be upheld so long as they are not draconian.” McMillan v. Intercargo, 768 A.2d 492, 506 n. 62 (Del.Ch.2000).

. There appears to be ample enough academic debate over the effectiveness and utility of the analytical tool which should be employed. I do recognize that critics view the business judgment rule as no framework for analysis at all. That view presupposes that judges or regulators have an equal or greater expertise in exercising business judgments as in imposing social policy.

. Paramount Communications, Inc. v. QVC Network, Inc., 637 A.2d 34 (Del.1993).

. Paramount Communications, Inc. v. Time, Inc., 571 A.2d 1140 (Del.1989).

. Id. at 1152.

. Id. at 1151.