## Facts

- MacAndrews & Forbes Holdings Inc., controlled by Ronald O. Perelman, owned about 43% of M&F Worldwide Corp. (MFW) and proposed to acquire the remaining shares in a going-private merger at $24 per share.
- From the initial proposal, the controller made the transaction contingent on two non-waivable protections: (1) approval by an independent special committee of the board and (2) approval by a majority of the unaffiliated (minority) stockholders.
- MFW formed an independent special committee that selected its own legal and financial advisers, met multiple times over several months, negotiated with the controller, and obtained an increase in price from $24 to $25 per share.
- The merger was conditioned on and received approval from a majority-of-the-minority vote; about 65% of minority shares voting approved.
- The court found the minority vote was fully informed and uncoerced, and that there were no disclosure violations.
- Stockholder plaintiffs initially sought injunctive relief but, after expedited discovery, abandoned that request and pursued only post-closing damages for alleged fiduciary breaches.
- Defendants moved for summary judgment, arguing that the dual protections warranted business judgment review and that plaintiffs’ claims failed under that standard.

## Issues

1. What standard of review applies to a controlling stockholder squeeze-out merger when, from the outset, it is conditioned on both approval by an independent, empowered special committee and approval by an informed, uncoerced majority of the minority stockholders.
2. Whether, on an undisputed record, those protections operated effectively so that defendants were entitled to summary judgment.

## Decision

- The Court of Chancery granted defendants’ motion for summary judgment.
- The court held that business judgment review applies when a controller conditions the transaction ab initio on both special committee approval and a majority-of-the-minority vote, and both protections function as intended.
- On the record presented, the special committee was independent, adequately empowered, and satisfied its duty of care; the minority vote was informed and uncoerced.
- Because business judgment review applied, plaintiffs’ post-closing damages claims failed as a matter of law.

## Legal Principles

- A controlling stockholder buyout can receive business judgment deference if, from the beginning, it is conditioned on both (1) an independent, fully empowered special committee that can say no and (2) a non-waivable, informed, uncoerced majority-of-the-minority vote.
- The dual protections are evaluated for real-world effectiveness, including committee independence, genuine bargaining authority, proper advisor selection, and a record showing reasonable care in negotiation.
- A majority-of-the-minority vote provides cleansing effect only if stockholders are fully informed and free from coercion.
- Absent satisfaction of the dual-protection framework (or where factual disputes remain), controller squeeze-outs remain subject to entire fairness review.

## Conclusion

The court held that a controller freeze-out merger structured from the outset to require both effective special committee approval and an informed, uncoerced majority-of-the-minority vote is reviewed under the business judgment rule, and it entered summary judgment for defendants on the undisputed record.


In re MFW S’holders Litig., 67 A.3d 496 (Del. Ch. 2013)