## Facts

- Martin Marietta Materials, Inc. and Vulcan Materials Co. are competitors in construction aggregates and materials.
- In 2010, while discussing a potential friendly merger, the parties executed a non-disclosure agreement (NDA) and a common interest/joint defense and confidentiality agreement (JDA).
- The JDA limited use of “Confidential Materials” to pursuing and completing a defined “Transaction,” described as a potential combination or acquisition being discussed between the companies.
- The NDA restricted disclosure of “Evaluation Material,” barred disclosure of the existence/status of negotiations, and allowed disclosure only when “legally required” by an external demand (e.g., subpoenas), subject to notice, vetting, and minimum-necessary limits.
- By 2011, Martin used Vulcan’s confidential, nonpublic information to evaluate alternatives to a negotiated deal and later launched an unsolicited exchange offer and proxy contest to gain control of Vulcan.
- In connection with the hostile bid, Martin disclosed Vulcan’s nonpublic information to advisors and in public securities filings.
- Martin sought declaratory relief that the agreements did not bar the exchange offer and proxy contest; Vulcan counterclaimed for breach and sought injunctive relief.
- After trial, the Delaware Court of Chancery found breaches of the NDA and JDA and enjoined Martin for four months from prosecuting the exchange offer and proxy contest; the Delaware Supreme Court affirmed.

## Issues

1. Whether the NDA and JDA permitted Martin to use confidential information obtained during friendly merger discussions to plan and launch a hostile takeover.
2. Whether the NDA’s “legally required” exception allowed Martin to publicly disclose Vulcan’s nonpublic information in securities filings supporting the exchange offer and proxy contest, and whether Martin complied with notice/vetting and minimum-necessary limits.
3. Whether a four-month injunction barring the hostile bid activity was an abuse of discretion.

## Decision

- The Delaware Supreme Court affirmed the Court of Chancery’s judgment for Vulcan and the four-month injunction.
- The courts held Martin breached the NDA and JDA by using and disclosing Vulcan’s confidential information to support a hostile takeover effort.
- The courts held the NDA’s “legally required” disclosure exception did not justify Martin’s public disclosures because any disclosure duties arose from Martin’s voluntary decision to launch the hostile bid, not from an external compulsory demand.
- The courts upheld injunctive relief as appropriate and contractually contemplated, and found no abuse of discretion in the injunction’s scope and duration.

## Legal Principles

- Delaware enforces confidentiality agreements in accordance with their text and context, including negotiated limits on the permitted use of shared M&A information.
- Confidentiality agreements restricting use of evaluation materials to a defined transaction may bar use of that information to pursue a hostile, unsolicited bid, even absent an express standstill clause.
- “Legally required” disclosure carve-outs are construed narrowly; disclosure obligations triggered by a party’s voluntary strategic choice to commence a transaction generally do not qualify as externally compelled demands.
- Where a confidentiality agreement requires notice, counterparty review, and disclosure limited to the minimum necessary, failure to follow those procedures supports a finding of breach.
- Express contractual provisions authorizing specific performance and injunctive relief are given effect, particularly where damages from loss of bargaining position and business disruption are difficult to quantify.

## Conclusion

Delaware courts held that confidentiality obligations from failed friendly merger talks barred Martin from using and publicly disclosing Vulcan’s nonpublic information to advance a hostile takeover, and they enforced the parties’ bargained-for equitable remedies by sustaining a four-month injunction against the exchange offer and proxy contest.


Martin Marietta Materials, Inc. v. Vulcan Materials Co., 56 A.3d 102 (Del. 2012)