## Facts

- Baton Rouge MSA Limited Partnership, a Delaware limited partnership, was formed to hold and operate a cellular telephone system.
- Baton Rouge CGSA, Inc., a BellSouth subsidiary, served as the partnership’s general partner; Star Cellular Telephone Co., Inc. and Capitol Cellular, Inc. were limited partners.
- The partnership agreement prohibited the general partner from transferring its partnership interest without prior written notice and unanimous partner consent.
- Baton Rouge merged with two other BellSouth subsidiaries without giving the limited partners notice or obtaining their consent.
- The surviving corporation changed its name to Louisiana, Inc. and continued as general partner.
- The limited partners contended the merger constituted an impermissible “transfer” or “assignment” of the general partner interest and sought equitable relief, including reconveyance of assets or the general partner interest.
- Defendants argued a statutory merger effects succession by operation of law and, absent explicit contract language, is not a “transfer” triggering the anti-transfer clause.

## Issues

1. Whether the general partner’s statutory merger, without notice or unanimous consent, constituted a prohibited “transfer” or “assignment” of its partnership interest under the partnership agreement.
2. Whether an anti-transfer clause that does not expressly address mergers or transfers “by operation of law” should be construed to restrict a contracting party’s ability to merge.

## Decision

- On cross-motions for summary judgment, the Court of Chancery entered summary judgment for defendants.
- The court held the merger did not constitute a “transfer” or “assignment” within the meaning of the partnership agreement’s anti-transfer clause.
- Because no contractual breach was found, the court denied the limited partners’ requested equitable relief.

## Legal Principles

- Contract terms such as “transfer” and “assignment,” when not defined and not accompanied by language addressing mergers or operation-of-law succession, may be construed narrowly in context.
- Under Delaware corporate law (including 8 Del. C. § 259), a statutory merger vests the disappearing entity’s rights and property in the surviving corporation by operation of law, rather than by a separate conveyance.
- Absent clear contractual language extending an anti-assignment/anti-transfer clause to mergers or operation-of-law successions, a corporate merger generally will not be treated as a prohibited transfer.
- Continuity of control and enterprise (here, continued BellSouth control before and after the merger) supports treating the transaction as internal statutory succession rather than the type of third-party alienation anti-transfer provisions commonly target.
- Courts will not infer that parties intended to curtail a corporation’s statutory power to merge without explicit contract language evidencing that intent.

## Conclusion

The court construed the partnership agreement’s anti-transfer provision not to reach the general partner’s statutory merger because the clause did not expressly cover mergers or operation-of-law successions, and the transaction reflected continued control within the same corporate group rather than a bargained-for change in counterpart identity.


Star Cellular Tel. Co., Inc. v. Baton Rouge CGSA, Inc., 1993 Del. Ch. LEXIS 158 (Del. Ch. 1993)