Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.

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Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.
the Delaware Supreme Court

Syllabus

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506 A.2d 173 (Del. 1986); a landmark decision of the Delaware Supreme Court on hostile takeovers. The Court declared that, in certain limited circumstances indicating that the "sale" or "break-up" of the company is inevitable, the fiduciary obligation of the directors of a target corporation are narrowed significantly, the singular responsibility of the board being to maximize immediate stockholder value by securing the highest price available. (The role of the board of directors transforms from "defenders of the corporate bastion to auctioneers charged with getting the best price for the stockholders at a sale of the company.") Accordingly, the board's actions are evaluated in a different frame of reference. In such a context, that conduct can not be judicially reviewed pursuant to the traditional business judgment rule, but instead will be scrutinized for reasonableness in relation to this discrete obligation

785055Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. — Syllabusthe Delaware Supreme Court

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Opinion of the Court
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Supreme Court of Delaware

506 A.2d 173

REVLON, INC., a Delaware corporation, MICHEL C. BERGERAC, SIMON ALDEWERELD, SANDER P. ALEXANDER, JAY I. BENNETT, IRVING J. BOTTNER, JACOB BURNS, LEWIS L. GLUCKSMAN, JOHN LOUDON, AILEEN MEHLE, SAMUEL L. SIMMONS, IAN R. WILSON, PAUL P. WOOLARD, EZRA K. ZILKHA, FORSTMANN LITTLE & CO., a New York limited partnership, and FORSTMANN LITTLE & CO. SUBORDINATED DEBT And EQUITY MANAGEMENT BUYOUT PARTNERSHIP-II, a New York limited partnership, Defendants Below, Appellants, v. MacANDREWS & FORBES HOLDINGS, INC., a Delaware corporation, Plaintiff Below, Appellee

No. 353, 354 Argued: October 31, 1985 --- Decided: March 13, 1986

A. Gilchrist Sparks, III (argued), Lawrence A. Hamermesh, and Kenneth Nachbar, of Morris, Nichols, Arsht & Tunnell, Wilmington, and Herbert M. Wachtell, Douglas S. Liebhafsky, Kenneth B. Forrest, and Theodore N. Mirvis, of Wachtell, Lipton, Rosen & Katz, New York, New York, Of Counsel, for Appellant Revlon.

Michael D. Goldman, James F. Burnett, Donald J. Wolfe, Jr., Richard L. Horwitz, of Potter, Anderson & Corroon, Wilmington, and Leon Silverman (argued), and Marc P. Cherno, of Fried, Frank, Harris, Shriver & Jacobson, New York, New York, Of Counsel, for Appellant Forstmann Little.

Bruce M. Stargatt (argued), Edward B. Maxwell, 2nd, David C. McBride, Josy W. Ingersoll, of Young, Conaway, Stargatt & Taylor, Wilmington, and Stuart L. Shapiro (argued), Stephen P. Lamb, Andrew J. Turezyn, and Thomas P. White, of Skadden, Arps, Slate, Meagher & Flom, Wilmington, and Michael W. Mitchell (New York) and Marc B. Tucker (Washington, District of Columbia), of Skadden, Arps, Slate, Meagher & Flom, for Appellee.

McNeilly, Moore, Justices, and Balick, Judge (Sitting by designation pursuant to Del. Const., Art. IV, § 12.).

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