A decision from the Delaware Court of Chancery may suggest the
beginning of limitations on last year's decision of the Delaware
Supreme Court in Omnicare, in which the majority invalidated
a combination of deal lockups that absolutely guaranteed
stockholder approval of a merger.
The new decision, in the case of Orman v Cullman Civil
Action 18039 (Del Ch Oct 20 2004), upholds a voting agreement that
did not absolutely guarantee stockholder approval of a transaction,
but made approval more likely by effectively blocking any competing
transaction from being approved for at least 18 months. How far the
courts move away from Omnicare remains to be seen.
Omnicare
In Omnicare, the Delaware Supreme Court, in a rare 3-2
decision, held that parties could not guarantee the approval of a
merger by combining voting agreements and a force-the-vote
provision, without a fiduciary out, in a way that made stockholder
approval a mathematical certainty and concurrently prevented...