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Joanna J. Cline, Christopher B. Chuff, Taylor B. Bartholomew and Matthew M. Greenberg From left, Joanna J. Cline, Christopher B. Chuff, Taylor B. Bartholomew and Matthew M. Greenberg, with Pepper Hamilton.

The Delaware Court of Chancery has again confirmed that it will not entertain lawsuits that seek to second-guess a board of directors’ good-faith decision to accept one acquisition proposal over another as long as a majority of the board is unaffected by conflicts or the influence of a controlling stockholder. In a recent opinion—In re Essendant Shareholder Litigation, C.A. No. 2018-0789-JRS—the court held that Essendant’s directors did not breach their fiduciary duties by choosing to accept an all-cash offer over an already accepted stock deal, even though it was alleged that the rejected stock deal provided more value to Essendant stockholders. The decision reinforces Delaware’s strong policy of protecting and promoting the role of the board of directors as the ultimate manager of the corporation as well as Delaware law’s reluctance to displace or interfere with good-faith directorial decisions.

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