The Delaware Court of Chancery can’t seem to stop talking about no-talk clauses. In the court’s second decision on the issue in a month, Vice Chancellor Leo Strine on Oct. 25 cast further doubt on the legality of the provisions, which limit merger parties’ ability to talk to other suitors.
Judge Strine declined to grant Bermuda insurer ACE Ltd. a temporary restraining order to prevent New York-based insurer Capital Re Corp. from terminating their June 11 merger. ACE claimed that the deal prohibited Capital Re from talking to other bidders unless it received written advice from outside counsel that its fiduciary duties required such talks. Cap Re wanted to negotiate with Bermuda insurer XL Capital Ltd., which lost out to ACE in the bidding for Cap Re.
