## Facts

- Ivanhoe Partners held about 10% of Newmont Mining Corporation’s stock and commenced a hostile tender offer seeking to acquire 51% of Newmont.
- The tender offer was “partial,” in that it did not commit to acquire the remaining shares, creating potential coercion and unequal treatment concerns for non-tendering stockholders.
- Newmont’s board viewed the bid as a threat and adopted a restructuring plan to sell non-gold assets and refocus as a primarily gold company.
- Newmont planned a large, pro rata special dividend of roughly $33 per share funded by the asset sales.
- Newmont also negotiated with its largest stockholder, Consolidated Gold Fields PLC, for a “street sweep” allowing Gold Fields to increase its ownership up to 49.9%, coupled with a standstill agreement governing Gold Fields’ conduct.
- Ivanhoe and stockholder plaintiffs sued to enjoin the dividend, restructuring, and Gold Fields arrangements, alleging fiduciary breaches and improper entrenchment.
- Before the preliminary-injunction hearing, Newmont and Gold Fields amended the standstill to remove or narrow provisions the court viewed as most entrenching.

## Issues

1. Whether Newmont’s restructuring, special dividend, and Gold Fields street-sweep/standstill arrangement were defensive measures adopted primarily for entrenchment, in breach of fiduciary duty.
2. Whether the board reasonably perceived a threat and responded with measures reasonable in relation to that threat under *Unocal* enhanced scrutiny.
3. Whether specific standstill provisions unlawfully impeded future change-of-control opportunities or locked in board control.
4. Whether plaintiffs satisfied the requirements for preliminary injunctive relief (likelihood of success, irreparable harm, and balance of equities).

## Decision

- The Court of Chancery largely denied the motions for a preliminary injunction.
- The court held that the board had reasonable grounds to perceive threats from both Ivanhoe’s partial tender offer and Gold Fields’ potential to influence or obtain control.
- The court found the restructuring and pro rata $33 dividend were supported by an informed process and provided immediate value to all stockholders, making them reasonable in relation to the threats.
- The court treated the Gold Fields 49.9% street sweep as potentially preclusive but not automatically invalid when paired with meaningful constraints.
- The court identified certain standstill terms as problematic because they tended to entrench the incumbent board and impede future bids.
- Because amendments substantially mitigated those entrenching features, the court declined to enjoin the overall transaction package at the preliminary stage.

## Legal Principles

- Under *Unocal* enhanced scrutiny, directors adopting defensive measures must (1) show reasonable grounds for perceiving a threat to corporate policy and effectiveness after good-faith, informed investigation, and (2) demonstrate the response is reasonable in relation to the threat posed.
- A partial or structurally coercive tender offer may constitute a cognizable threat that permits defensive action.
- Defensive measures that deliver substantial, non-discriminatory benefits pro rata to stockholders are more likely to satisfy proportionality review.
- Arrangements granting a favored stockholder a large blocking position (e.g., near-control ownership) are subject to close scrutiny, particularly where contract terms impede future change-of-control alternatives.
- In preliminary-injunction analysis, subsequent amendments that cure objectionable governance or voting constraints can materially reduce the plaintiff’s likelihood of success and affect the balance of equities.

## Conclusion

The court refused to halt Newmont’s dividend-and-restructuring response to Ivanhoe’s partial bid, concluding that the board reasonably perceived takeover-related threats and adopted a proportionate, stockholder-wide value-enhancing plan under *Unocal*, while signaling that standstill provisions that lock in control or obstruct future bids are suspect and may require correction.


Ivanhoe Partners v. Newmont Mining Corp., 533 A.2d 585 (Del. Ch. 1987)