Thomas & Betts Corporation v. Leviton Manufacturing Co., Inc.
Supreme Court of Delaware
681 A.2d 1026 (1996)
Thomas & Betts Corporation (Thomas & Betts) (plaintiff) is a publicly traded New Jersey corporation. Leviton Manufacturing Co., Inc. (Leviton) (defendant) is a closely held Delaware corporation. In an effort to acquire Leviton, Thomas & Betts secretly purchased 29.1 percent of Leviton’s outstanding shares. Thomas & Betts then attempted to cultivate a working relationship with Leviton insiders. When that failed, Thomas & Betts served Leviton with a formal demand for inspection of corporate documents under § 220 of the Delaware General Corporation Law. The demand stated the documents were necessary to investigate possible waste and mismanagement, and to assist in the valuation of Thomas & Betts’ Leviton shares. When Leviton refused the inspection demand, Thomas & Betts filed action in the Court of Chancery seeking to compel inspection. The Court of Chancery held that Thomas & Betts’ demand for inspection was motivated by the improper purpose of gaining leverage in its efforts to acquire Leviton. However, the Court of Chancery held that Thomas & Betts was nonetheless entitled to limited, narrowly circumscribed inspection to value its Leviton shares, since Thomas & Betts had experienced a fundamental change of circumstances. Thomas & Betts appealed that decision.
Rule of Law
Holding and Reasoning (Veasey, C.J.)