## Facts

- C & J Energy Services, Inc. (C&J), a Delaware public company, agreed to a transaction with Nabors Industries Ltd. in which C&J would acquire a Nabors subsidiary and the combined company would be domiciled in Bermuda.
- Nabors would receive about $938 million in cash and about 53% of the combined company’s equity; C&J’s public stockholders would hold about 47%.
- The board cited significant expected tax savings from the Bermuda domicile as a key economic rationale.
- The merger agreement included a no-shop clause, but also a fiduciary out permitting the board to accept a superior proposal arising through a passive market check.
- The deal structure included protections for legacy C&J stockholders, including governance constraints and a bylaw requiring pro rata treatment of stockholders in any future sale, repealable only by unanimous stockholder vote.
- A C&J stockholder filed a class action alleging the board breached fiduciary duties under Revlon by not affirmatively shopping the company before agreeing to a change-of-control transaction.
- The Court of Chancery issued a preliminary injunction delaying the stockholder vote and ordering a 30-day go-shop process, effectively overriding the no-shop clause, despite finding the board disinterested and well-informed.

## Issues

1. Whether a preliminary injunction in deal litigation requires a finding of a reasonable probability of success on the merits, rather than a merely “plausible” claim.
2. Whether Revlon duties impose a per se requirement that a board affirmatively shop the company in a change-of-control transaction.
3. Whether equity permits a mandatory injunction that rewrites negotiated deal-protection terms absent a finding of likely fiduciary breach and counterparty aiding-and-abetting.

## Decision

- The Delaware Supreme Court reversed the preliminary injunction and remanded.
- The Court held the Court of Chancery misapplied the preliminary-injunction standard by failing to find a reasonable probability of success on the merits.
- The Court rejected the premise that Revlon requires an active pre-signing or post-signing shopping process in all change-of-control deals.
- The Court held it was improper at the preliminary stage to “blue-pencil” the merger agreement by compelling a go-shop and negating the no-shop clause without findings of likely breach and aiding-and-abetting.
- The injunction was lifted and the merger agreement’s original deal-protection terms were reinstated.

## Legal Principles

- A plaintiff seeking a preliminary injunction must show (i) a reasonable probability of success on the merits, (ii) irreparable harm, and (iii) that the equities favor relief; “plausibility” is insufficient.
- Revlon review is context-specific; directors are not required in every case to conduct an auction or active market check, but must act reasonably to seek the best value reasonably available.
- Courts should not use mandatory preliminary injunctions to alter negotiated merger terms absent a strong showing of likely fiduciary breach and, where relevant to the remedy, counterparty participation in wrongful conduct.
- Stockholder choice and contractually permitted passive market checks may weigh against injunctions that delay a vote to force an alternative sale process.

## Conclusion

The court limited deal injunctions by requiring a demonstrated likelihood of success on the merits, confirmed that Revlon does not mandate a per se “shop the company” process, and cautioned against judicially rewriting merger agreements through mandatory preliminary relief without strong supporting findings.


C & J Energy Servs., Inc. v. City of Miami Gen. Emps.’ & Sanitation Emps.’ Ret. Tr., 107 A.3d 1049 (Del. 2014)