Lyondell Chemical Co. v. Ryan
Delaware Supreme Court
970 A.2d 235 (2009)
Dan Smith (defendant) was chairman and CEO of Lyondell Chemical Company (Lyondell) (defendant). Leonard Blavatnik owned Access Industries (Access), which owned Luxembourg company Basell AF (Basell). Basell’s 2006 offer to acquire Lyondell was rejected. A year later, an affiliate of Access filed a Schedule 13D disclosure indicating its right to purchase more than eight percent of Lyondell’s stock from another company and Blavatnik’s interest in Lyondell. Lyondell’s directors (defendants) called a meeting. Though the Schedule 13D made clear that Lyondell was “in play,” the directors elected not to take any action at that time. Blavatnik renewed his offer to Lyondell at $40 per share on July 9, 2007. Lyondell’s board had a series of meetings to consider the offer. After negotiating with Blavatnik, the offer was increased to $48 per share. The board’s independent financial and legal advisers concluded that the offer was fair and a better deal was unlikely. On July 16, 2007, the board voted to recommend the merger to Lyondell’s shareholders. The shareholders almost unanimously approved the merger. Ryan and others (plaintiff) filed a class action suit in the Court of Chancery against Lyondell and its directors claiming breach of fiduciary duties regarding the negotiations and final merger agreement. The trial court dismissed all claims except the claims that the merger negotiation process was inadequate and the directors should not have agreed to the protection provisions.
Rule of Law
Holding and Reasoning (Berger, J.)