## Facts

- Olin Corporation acquired a 63.4% controlling interest in Philip A. Hunt Chemical Corporation (Hunt) from Turner & Newall Industries, Inc. for $25 per share.
- The acquisition agreement provided that if Olin acquired the remaining Hunt shares within one year, Olin would pay $25 per share for those shares.
- After the one-year period expired, Olin proposed a cash-out merger for the remaining shares at $20 per share.
- Minority stockholders alleged Olin always intended to acquire the remainder but delayed the squeeze-out until after the one-year deadline to avoid the $25 price commitment.
- Minority stockholders further alleged that the fairness work supporting the $20 price was rushed and failed to consider key information, and that Hunt’s outside directors were advised $20 was fair but at the low end of a $19–$25 range.
- Minority stockholders filed consolidated class actions in the Delaware Court of Chancery challenging the merger’s fairness and asserting fiduciary breaches tied to timing and price.

## Issues

1. Whether, in a cash-out merger, appraisal is the exclusive remedy for minority stockholders absent deception.
2. Whether allegations that a controlling stockholder intentionally timed a cash-out merger to avoid a $25 per share commitment state a claim for breach of fiduciary duty and unfair dealing under entire fairness, permitting relief beyond appraisal and allowing amendment of the complaint.

## Decision

- The Delaware Supreme Court reversed the dismissal of the complaints and the denial of leave to amend and remanded.
- The Court held the trial court read prior precedent too narrowly; equitable fiduciary-duty claims are not barred merely because disclosure deception is not alleged.
- The Court concluded the pleadings alleged specific acts of unfair dealing that, if proven, could have materially affected the price offered to the minority.
- Because the allegations went to procedural unfairness bearing on price, appraisal was not the exclusive remedy.

## Legal Principles

- In a controller cash-out merger, statutory appraisal is not automatically the sole remedy when the complaint pleads unfair dealing amounting to fiduciary breaches that reasonably bear on the price offered.
- Entire fairness review may encompass both fair dealing and fair price; conduct affecting the process and timing can be actionable where it plausibly impacts the consideration paid.
- Allegations that a controller structured or timed a transaction to defeat a minority benefit tied to an existing price commitment can support an equitable claim for breach of fiduciary duty beyond a pure valuation dispute.
- Leave to amend should be permitted where proposed amendments plead nonconclusory facts supporting unfair dealing that could affect price and remedies.

## Conclusion

The Delaware Supreme Court held that minority stockholders who plausibly alleged the controlling stockholder manipulated the timing of a squeeze-out to avoid a $25 per share commitment stated an entire-fairness fiduciary-duty claim, so appraisal was not the exclusive remedy and amendment should have been allowed.


Rabkin v. Philip A. Hunt Chem. Corp., 498 A.2d 1099 (Del. 1985)