Corporate boards and their lawyers breathed a collective sigh of relief March 25 when an en banc Delaware Supreme Court reversed a ruling many feared could expose directors to personal liability in M&A deals.
The facts of the case date back to April 2006, when Dutch chemical company Basell expressed interest in acquiring Lyondell Chemical Co. That was followed in May 2007 by an unsolicited offer from Basell. By July, the parties had negotiated to a price of $48 per share of Lyondell stock–but the offer came with a one-week window. Lyondell accepted and its shareholders sued, characterizing the board’s consideration of the bid as whirlwind. Courts allowed the merger to go forward (it was completed in late 2008), and the shareholders pursued damages from the directors for breaching their fiduciary duties by greenlighting the deal. Their claims applied the test of the fiduciary duty of good faith to the M&A context.
