Weinberger v. UOP, Inc.

This decision introduces the modern standard of review for conflicted transactions involving a controlling shareholder.What is that standard of review, generally speaking?Can the controlling shareholder do anything to obtain a more favorable standard, or at least a more sympathetic application of the standard (cf. footnote 7)?How does the judicial treatment of self-dealing by a controlling shareholder compare to that of self-dealing by simple officers and directors (as described in the introduction to this section 2.2.1)?Does the harsher treatment of controlling shareholders make sense?Some terminology (for details, see the M&A section of the course):Cash-out merger: A transaction in which some group of shareholders, generally minority shareholders, are “squeezed out” of the corporation. That is, they cease to be shareholders of the corporation in return for a cash payment, whether they like it or not. The name comes from the fact that the transaction is technically a merger between the corporation and some other corporation. The other corporation is usually a mere shell corporation, meaning it has been set up only for the merger and does not have any assets. While DGCL 251(c) requires shareholder approval for a merger, a simple majority vote is sufficient and hence minority approval is unnecessary. DGCL 251(b)(5) expressly allows conversion of existing shares into cash. Minority shareholders' only statutory remedy is an appraisal of the “fair value” of their shares under DGCL 262.Tender offer: An offer to purchase shares addressed to all shareholders.