## Facts

- Inter-Tel (Delaware), Inc. entered a merger agreement to be acquired by Mitel Networks Corporation in an all-cash transaction for $25.60 per share.
- Inter-Tel’s board formed an independent special committee to evaluate alternatives and negotiate; the committee recommended the Mitel transaction, and the board approved it and set a special stockholder meeting.
- The merger required approval by a majority of outstanding shares, not merely a majority of votes cast.
- As the scheduled meeting date approached, the board concluded the merger would likely be voted down due to negative recommendations and significant non-support/non-voting.
- The independent directors believed a failed vote would likely cause Mitel to withdraw and Inter-Tel’s stock price to drop materially.
- The board adjourned and rescheduled the special meeting to a later date, set a new record date, continued to recommend the transaction, and continued solicitation efforts.
- Stockholders filed a putative class action seeking a preliminary injunction, arguing the rescheduling and record-date reset unlawfully interfered with the stockholder franchise.

## Issues

1. What standard of review governs independent directors’ decision to postpone a stockholder meeting and reset the record date for a merger vote the board expects to lose: Blasius “compelling justification,” Unocal enhanced scrutiny, or a combined approach?
2. Did postponing the merger vote and resetting the record date constitute an impermissible interference with stockholder voting rights (coercive or preclusive), or a reasonable response to a legitimate corporate objective?
3. Did plaintiffs satisfy the requirements for a preliminary injunction, including likelihood of success on the merits and a balance of equities favoring injunctive relief?

## Decision

- The court applied enhanced scrutiny that incorporates Blasius’s voting-rights concerns into a reasonableness-based analysis.
- The court held the board identified a legitimate corporate objective and proved proper, non-selfish motivations.
- The court found the postponement and new record date were reasonable means and were neither coercive nor preclusive of the stockholders’ ability to reject the merger.
- The court denied the request for a preliminary injunction, allowing the rescheduled meeting and vote to proceed.

## Legal Principles

- When board action affects the stockholder franchise in a transaction implicating corporate control, the court applies enhanced scrutiny focused on reasonableness.
- Under that scrutiny, directors must (1) articulate a legitimate corporate objective, (2) show proper motivations rather than selfish entrenchment, and (3) demonstrate their response is reasonable and does not coerce or preclude effective stockholder choice.
- Blasius’s protection of voting rights operates as part of enhanced scrutiny; it is not a mechanically triggered, freestanding requirement that automatically demands a separate “compelling justification” inquiry.
- A limited postponement intended to improve the informational environment, without disabling the stockholder vote or forcing an outcome, can be permissible even if the board expects the proposal to fail on the original date.
- Preliminary injunctive relief requires a showing of likely success on the merits and a balance of equities supporting an injunction; potential loss of a premium offer may weigh against injunctive interference where stockholders retain a meaningful vote.

## Conclusion

The court refused to enjoin the merger process, holding that independent directors may reschedule a merger vote and reset the record date under enhanced scrutiny when they act for a legitimate, non-selfish purpose and use measures that remain reasonable and do not coerce or preclude stockholders from freely rejecting the transaction.


Mercier v. Inter-Tel (Delaware), Inc., 929 A.2d 786 (Del. Ch. 2007)