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Mercier v. Inter-Tel (Delaware), Inc.
Delaware Court of Chancery
929 A.2d 786 (Del. Ch. 2007)
Inter–Tel (Delaware), Incorporated (Inter-Tel) (defendant) entered into a merger agreement with Mitel Networks Corp. (Mitel). A special shareholder meeting was scheduled to consider the merger. Several major shareholders disfavored the transaction. Despite the efforts of Inter-Tel's directors (defendants), Mitel refused to raise its offer. Before the shareholders voted, the board knew that the merger would be defeated, but the board believed that the merger was in the best interests of the shareholders. The board decided to postpone the meeting for 30 days so that the company's performance data would be disclosed and shareholders would have more time to consider the recent low mergers and acquisitions market. The shareholders approved the merger. Vernon Mercier (plaintiff) was a dissenting shareholder of Inter-Tel. Mercier sought a preliminary injunction against the closing of the merger and asked for another vote. The board alleged that Mitel would walk away if another vote was ordered. Mercier argued that the directors' action should be reviewed under Blasius Industries, Inc. v. Atlas Corp., 564 A.2d 651 (Del. Ch. 1998), because they acted for the primary purpose of depriving shareholders of the right to oppose the merger. The directors argued that they did not act to entrench themselves, and thus, their action should be reviewed under the business judgment rule.
Rule of Law
Holding and Reasoning (Strine, J.)
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