Delaware Chancery Court Playing Tough With Companies Going Private

In recent back-to-back opinions, the Court has criticized two publicly listed companies that have agreed to sell themselves to private investors. The rulings expressed concern that Topps Co. and Lear Corp. hadn’t disclosed enough information to shareholders about possible incentives the companies’ managements may have to agree to the deals. According to the story, the decisions, both authored by the colorful Vice Chancellor Leo E. Strine, Jr., could slow the pace of some transactions given the five-judge Court’s influence in corporate-governance issues and takeover disputes.
In the case of Lear, an auto-parts maker that billionaire financier Carl Icahn is seeking to buy for $2.9 billion, Strine faulted the company’s board for letting its Chief Executive, Robert Rossiter, negotiate the deal with Icahn on his own. In the case of Topps, Strine ruled that the company should have been more forthcoming about an agreement with its suitor to retain Topps’s management.