## Facts

- Del Monte Foods Co. agreed to a $5.3 billion leveraged buyout in which stockholders would receive $19 per share in cash.
- The board retained Barclays as its lead financial advisor for the sale process.
- While advising Del Monte, Barclays sought to earn additional fees by providing acquisition financing to the eventual buyer group, creating a conflict between maximizing stockholder value and securing buy-side financing work.
- During the process, confidentiality agreements barred bidders from teaming up without the board’s prior written consent.
- Without the board’s knowledge or approval, Barclays facilitated a consortium bid by KKR, Centerview, and Vestar despite the no-teaming restrictions and positioned itself to provide financing to that consortium.
- After learning some information about Barclays’ conflicts, the board retained a second advisor but continued to use Barclays and permitted it to remain involved, including on buy-side financing.
- The merger agreement included deal protections, including a no-solicitation restriction and a termination fee.
- Stockholders were scheduled to vote on the merger; the proxy materials allegedly did not fully disclose Barclays’ conflicts and role in shaping the bid structure.

## Issues

1. Whether plaintiffs showed a reasonable probability of success that the board breached its Revlon duties by conducting a sale process materially influenced by an undisclosed and unmanaged banker conflict.
2. Whether the merger’s deal protections (including the no-solicitation provision and termination fee) were unreasonable under enhanced scrutiny given the challenged process and should be enjoined or modified.
3. Whether alleged proxy disclosure deficiencies regarding the advisor’s conflicts and conduct supported injunctive relief to protect an informed, uncoerced stockholder vote.

## Decision

- The Court of Chancery granted the motion for a preliminary injunction in part.
- The court postponed the stockholder vote.
- The court temporarily enjoined or rendered inoperative key deal protections (including the termination fee and no-solicitation restrictions) for a limited period to permit a renewed market check.
- The court ordered corrective disclosures to address material information about Barclays’ conflicts and actions.
- The court did not permanently enjoin the merger, instead tailoring relief to remedy process and disclosure problems before any vote and closing.

## Legal Principles

- In a change-of-control transaction, directors are subject to enhanced scrutiny under Revlon and must act reasonably to seek the best transaction reasonably available.
- A board may rely on financial advisors, but it must actively supervise them and respond to conflicts; undisclosed banker incentives can taint the sale process and impair the board’s ability to satisfy Revlon.
- Deal-protection measures must be reasonable in relation to their purposes; when layered onto a sale process affected by conflicts, they may improperly deter superior offers and can be enjoined to restore a meaningful market check.
- Stockholders are entitled to materially complete and accurate disclosures in connection with a merger vote, including information about a financial advisor’s economic interests and conduct affecting the process.
- At the preliminary-injunction stage, process defects and material disclosure problems can establish irreparable harm because lost opportunity for a better deal and a misinformed vote cannot be readily repaired after closing.

## Conclusion

The court found a sufficient showing that banker conflicts and inadequate board oversight likely compromised the Revlon sale process and that stockholders lacked material information about those conflicts; it therefore delayed the vote, required corrective disclosures, and temporarily disabled key deal protections to allow a renewed market check before stockholders decided whether to approve the transaction.


In re Del Monte Foods Co. S’holders Litig., 25 A.3d 813 (Del. Ch. 2011)