## Facts

- A Lyondell shareholder brought a class action challenging a $13 billion all-cash sale of Lyondell Chemical Company to Basell AF.
- Basell had expressed acquisition interest since 2006 and filed a Schedule 13D in May 2007; the board initially took a “wait and see” approach.
- On July 9, 2007, Basell made an oral offer that became $48 per share, with no financing contingency, a large termination fee, and a seven-day deadline to sign a definitive agreement.
- The board met repeatedly over the next days, retained financial and legal advisors, and negotiated for a higher price and improved terms; Basell reduced the termination fee slightly but resisted other changes.
- The financial advisor opined the price was fair; counsel advised the agreement’s fiduciary-out provision permitted the board to respond to superior proposals.
- The board approved the merger agreement; stockholders approved it overwhelmingly (about 99% of voting shares), at a substantial premium to market.

## Issues

1. Whether the directors breached the duty of loyalty by acting in bad faith (consciously disregarding duties) while fulfilling Revlon obligations in negotiating and approving the sale.
2. Whether, given an exculpatory charter provision under DGCL § 102(b)(7), the record supported a triable claim for monetary damages based on bad faith rather than merely due care.

## Decision

- The Delaware Supreme Court reversed the Court of Chancery’s denial of summary judgment for the directors.
- The Court held the record did not support an inference that the directors acted in bad faith or knowingly ignored their fiduciary responsibilities.
- The Court concluded the evidence, at most, could support a due-care claim, which could not support monetary liability because of the § 102(b)(7) exculpation.
- The case was remanded with instructions to enter summary judgment for the director defendants.

## Legal Principles

- When a corporation has a DGCL § 102(b)(7) exculpatory provision, monetary damages against directors require a non-exculpated claim, such as a loyalty breach or bad faith; a due-care claim alone is insufficient.
- “Bad faith” in this context requires intentional dereliction of duty or conscious disregard of responsibilities, not merely an imperfect, hurried, or arguably negligent decision-making process.
- Revlon imposes a context-specific obligation to seek the best value reasonably attainable, but it does not mandate an auction, a pre-signing market check, or a fixed set of procedural steps in every sale.
- Reliance on advisors, board engagement during negotiations, negotiation over price and key terms, and inclusion of a fiduciary out can negate an inference that directors consciously chose not to pursue stockholder value.

## Conclusion

The Delaware Supreme Court held that criticisms of the board’s Revlon process did not establish bad faith absent evidence that directors knowingly disregarded their duties; with § 102(b)(7) exculpation, the directors were entitled to summary judgment.


Lyondell Chem. Co. v. Ryan, 970 A.2d 235 (Del. 2009)