McMullin v. Beran
Delaware Supreme Court
2000 Del. LEXIS 481 (2000)
- Written by Rich Walter, JD
Facts
Atlantic Richfield Company (ARCO) (defendant) owned 80.1 percent of the shares in ARCO Chemical Company (Chemical) (defendant). Many ARCO officers and directors also sat on Chemical’s board of directors (defendants). These directors knew that ARCO urgently needed cash to complete its purchase of another petroleum producer. Chemical’s board authorized ARCO to negotiate a merger agreement by which the Lyondell Petrochemical Company (Lyondell) would acquire ARCO’s majority stake in Chemical and buy out Chemical’s minority shareholders. After Chemical’s investment advisor pronounced the deal fair to all shareholders, Chemical’s board approved the deal. Mary McMullin (plaintiff), a dissident minority shareholder, sued to block the merger and recited the foregoing facts in her pleadings. McMullin’s suit named Chemical, ARCO, Walter Beran (defendant), and Beran’s colleagues on Chemical’s board as defendants and alleged that they violated their Revlon duties to maximize the merger’s value for all Chemical shareholders. The Delaware Court of Chancery dismissed the suit on the grounds that Chemical’s board had acted within the scope of the business-judgment rule. McMullin appealed to the Delaware Supreme Court.
Rule of Law
Issue
Holding and Reasoning (Holland, J.)
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