In a recent opinion granting in part and denying in part a motion for summary judgment, Vice Chancellor John W. Noble provided guidance in Frank v. Elgamal, 2014 Del. Ch. LEXIS 37 (Del. Ch. Mar. 10, 2014), on what constitutes a control group in the context of a merger transaction and how the entire fairness and Revlon standards apply when there is a control group.
Background
In the transaction at issue, American Surgical Holdings Inc. merged with an affiliate of Great Point Partners I LP. As a result of the merger, four employees of American Surgical who collectively held a majority of American Surgical’s stock (referred to as the rollover group) received cash and equity in the surviving entity, while other stockholders received only cash. The plaintiff, Richard Frank, a stockholder who was not part of the rollover group, filed suit alleging breaches of fiduciary duty by both the rollover group and American Surgical’s board.
