In 1983 MAF acquired Technicolor through its wholly owned subsidiary Macanfor in a cash-out merger that became effective on January 24, 1983. MAF first purchased 3,534,181 shares at $23 per share in a tender offer that, together with 220,000 shares previously acquired, gave it control of approximately 82 percent of Technicolor’s outstanding stock; the Technicolor board then waived the charter’s 95 percent supermajority vote requirement and the shareholders approved the merger by the required two-thirds vote. Cinerama, Incorporated, beneficial owner of 201,200 shares representing roughly 4.5 percent of Technicolor’s common stock, and Cede & Company, the record owner, rejected the tender offer and voted against the merger.
Cinerama demanded appraisal under 8 Del. C. § 262 and filed its appraisal action against Technicolor in the Court of Chancery in March 1983. In June 1983 the court entered an order declaring that Cinerama had perfected its appraisal rights. Document discovery was completed by mid-1985, after which Cinerama began deposing Technicolor officers and directors.
During a December 1985 deposition, former director Charles S. Simone testified that he had neither voted to waive the supermajority requirement nor supported the merger. On the basis of this and other information obtained in appraisal discovery, Cinerama filed a separate fraud action in January 1986 against Technicolor, all but two of its directors, MAF, Macanfor, and Ronald O. Perelman. The complaint alleged fraud, conspiracy, self-dealing, waste, and breach of fiduciary duty and sought rescission of the merger or, alternatively, rescissory damages.
In March 1986 the defendants moved to dismiss the fraud action, asserting that Cinerama lacked standing after electing appraisal. In April 1986 Cinerama moved to amend its appraisal complaint to add the fraud claims or, alternatively, to consolidate the two actions for discovery and trial. By unreported opinion and interlocutory order dated January 13, 1987, the Court of Chancery denied the motion to dismiss, the motion to amend, and the motion to consolidate, but directed Cinerama to elect which action to pursue to trial after completing discovery.
Both sides appealed. Cinerama appealed the denial of amendment, the requirement of a pre-trial election, and the denial of consolidation. The defendants cross-appealed the denial of dismissal and the timing of any election.