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No Auction Required – Delaware Supreme Court Affirms Board Flexibility under Revlon

Ruling that an active solicitation process is not necessarily required for a target board of directors to satisfy its fiduciary duties in a change of control transaction, the Delaware Supreme Court overturned a preliminary injunction issued by the Delaware Court of Chancery. The Chancery Court's injunction not only enjoined the stockholders of C&J Energy Services, Inc. from approving C&J Energy's merger with a subsidiary of Nabors Industries Ltd., but also imposed a mandatory go-shop in contravention of the no-shop provisions of the merger agreement. In reversing the Chancery Court, the Supreme Court confirmed that transactions which do not include an active sale process are acceptable so long as interested bidders can present, and targets have the ability to accept, a higher value alternative.

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