K. Tyler O'Connell of Morris James

Stockholder M&A challenges in the Delaware Court of Chancery have declined in the wake of the well-known Trulia (and its federal corollary Walgreens) and Corwin decisions, which respectively reduced incentives for pre-closing M&A challenges by outlining a strict standard of review for disclosure-only settlements; and confirmed that, regardless of whether the process at issue complied with Revlon, transactions approved by an informed and uncoerced stockholder vote are subject to the protections of the business judgment rule. Against this backdrop, the Court's year-end decision in Lavin v. West Corp., C.A. No. 2017-0547-JRS, 2017 WL 6728702 (Del. Ch. Dec. 29, 2017), is of note, as it endorses the use of books and records demands to help stockholders meet Corwin's pleading demands.

Factual Background

Prior to the merger at issue, West Corporation (the company) was a publicly traded corporation that provided global communications and networking services. It featured four business lines, the largest of which was its Unified Communications Services (UC) line, accounting for over 60 percent of the company's revenue and operating income.

With respect to governance, approximately 25 percent of the company's shares were owned by two private equity funds that together had owned a majority of the Company prior to recent share divestitures. Despite the divestitures, under a stockholder agreement, the two funds retained the right to appoint half of the members of the company's 10-member board of directors (the board). Three of their designees were principals of the two funds, and two were putatively independent. The company's chairman and CEO also served on the board.

In September 2015, the company began to receive unsolicited expressions of interest in acquisitions of one or more of the company's business lines. By early 2017, the board focused on the sale of the company as a whole. Thereafter, the company received two offers from parties interested in acquiring business lines, other than the large UC line, at prices in excess of $2 billion. The board then began negotiating exclusively with Apollo Global Management (Apollo) toward an acquisition of the company as a whole. On May 9, 2017, the company signed a merger agreement for aggregate per share consideration of $2 billion in cash and the assumption of the company's long-term debt of $3.2 billion.