535 A.2d 840 (Del. 1987)
In March 1979, Curtiss-Wright Corporation owned 1,642,751 shares of Dorr-Oliver Incorporated's common stock, representing 65% of the total common stock outstanding.1 Curtiss-Wright began acquiring Dorr-Oliver stock in 1968, when it originally bought 261,500 shares, and had a continuing program to purchase up to 80% of Dorr-Oliver's stock, increasing its holdings from 21.6% in 1968 to 55% in 1969, 63% in 1972, and ultimately 65% by 1979.2 Plaintiff John Bershad was a minority shareholder of Dorr-Oliver holding 100 shares.3
In early 1979, Curtiss-Wright's board decided that a merger with Dorr-Oliver would be beneficial to Curtiss-Wright.4 In January 1979, the Dorr-Oliver board adopted a resolution authorizing a study of the proposed merger.5 Means Johnston, Jr., an outside independent Dorr-Oliver director, selected the investment banking firm of Lazard Freres & Company to advise the Dorr-Oliver board on the fairness of Curtiss-Wright's cash-out offer of $23 per share.6
In a letter dated March 13, 1979, Lazard Freres rendered an opinion that the merger exchange rate of $23.00 per share cash for the shares of Dorr-Oliver not presently held by Curtiss-Wright is fair to the shareholders of Dorr-Oliver (other than Curtiss-Wright) from a financial point of view.7 At a meeting on March 13, 1979, the Dorr-Oliver board considered this fairness opinion along with other pertinent information and approved the merger agreement at $23 per share by a vote of seven to zero, with the agreement requiring a favorable vote of a majority of Dorr-Oliver's minority stockholders.8
On April 10, Dorr-Oliver issued a proxy statement announcing a May 10 shareholder meeting.9 At that meeting, the merger was approved by a majority of Dorr-Oliver's minority stockholders, with 346,287 of the 434,280 minority-owned shares (79.7%) approving the transaction.10 The merger became effective on May 31, 1979.11
Although no Dorr-Oliver stockholders filed an appraisal action, plaintiff John Bershad filed two separate complaints challenging the transaction on March 14, 1979.12 Bershad had voted against the merger but thereafter tendered his 100 shares of Dorr-Oliver stock and received the $2,300 merger consideration.13 The Court of Chancery granted summary judgment in favor of the defendants on March 21, 1983, and Bershad appealed to the Supreme Court of Delaware.14
Whether Curtiss-Wright as majority shareholder owed Dorr-Oliver minority shareholders a fiduciary duty to auction the subsidiary to the highest bidder?15
Stockholders in Delaware corporations have a right to control and vote their shares in their own interest.16 They are limited only by any fiduciary duty owed to other stockholders.17 It is not objectionable that their motives may be for personal profit, or determined by whim or caprice, so long as they violate no duty owed other shareholders.18 A stockholder is under no duty to sell its holdings in a corporation, even if it is a majority shareholder, merely because the sale would profit the minority.19 Revlon is inapplicable when the company is not for sale.20
No. Curtiss-Wright owned approximately 65% of Dorr-Oliver and maintained no intention of selling its controlling interest in the subsidiary.21 The Dorr-Oliver board approved the cash-out merger at $23 per share without any auction process because Curtiss-Wright could have blocked any competing bid.22 Bershad's argument that Revlon required an auction when cashing out the minority is rejected as unsupported by accepted principles of law.23
Curtiss-Wright did not owe a fiduciary duty to auction Dorr-Oliver to the highest bidder.24
Whether Dorr-Oliver's proxy statement was false and misleading because it omitted Curtiss-Wright's policy of discouraging all offers to acquire Dorr-Oliver?25
An omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.26 The proxy statement must disclose all material facts.27 Efforts by public corporations to arrange mergers are immaterial until the firms have agreed on the price and structure of the transaction.28
No. The proxy statement disclosed that Curtiss-Wright had no present intention of selling its interest and that inquiries had not developed into offers.29 Any formal recitation of a policy of discouraging offers would not have significantly altered the total mix of information available to minority shareholders.30 The defendants were not obligated to disclose preliminary discussions regarding an unlikely sale because Dorr-Oliver was never for sale and no offer was ever made.31
The proxy statement was not false and misleading.32
Whether an informed minority shareholder who votes in favor of a cash-out merger or accepts its benefits may thereafter challenge the fairness of the merger price?33
When an informed minority shareholder either votes in favor of the merger, or accepts the benefits of the transaction, he or she cannot thereafter attack its fairness.34
No. Bershad voted against the merger but thereafter tendered his 100 shares of Dorr-Oliver stock and received the $2,300 merger consideration.35 Because he was an informed minority shareholder who accepted the benefits of the transaction by tendering his shares for payment, he cannot thereafter attack the fairness of the merger price under Delaware precedent.36
An informed minority shareholder who votes in favor or accepts benefits may not challenge the fairness of the merger price.37
Whether Weinberger provides a quasi-appraisal remedy for all informed minority shareholders challenging a cash-out merger effective on or before February 1, 1983?38
The quasi-appraisal remedy applies only to cases pending or with an effective date on or before February 1, 1983, but when an informed minority shareholder accepts the benefits, he cannot attack the fairness.39 The thrust of Weinberger is to protect rights tainted by unfairness, but acquiescence bars the claim.40
No. Bershad tendered his shares and accepted the merger consideration, thus acquiescing in the transaction and barring his own challenge.41 Although the case fell within the window for some shareholders who neither voted in favor nor tendered, Bershad himself is not entitled to pursue a quasi-appraisal remedy under Weinberger because he accepted the benefits of the merger.42
Weinberger does not provide a quasi-appraisal remedy for informed minority shareholders who accepted the benefits of the merger.43