In Re Smurfit-Stone Container Corp. Shareholder Litigation

This matter involved a stockholder challenge to a merger in which a third-party strategic aquiror had agreed to merge with the target corporation for consideration valued at $35 per share. Plaintiffs moved for a preliminary injunction and requested that the court delay the target's stockholder vote and enjoin the deal protections for a period of 45-60 days so as to allow the target to seek higher bids. The court first addressed the issue of whether and in what circumstances Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. applied when merger consideration was split roughly evenly between cash and stock. Based on its analysis, the court held that plaintiffs were likely to succeed on their argument that the approximately 50% cash and 50% stock consideration triggered Revlon. Therefore, when the board explored whether to enter into the proposed transaction, which warranted review under Revlon, its fiduciary duties required it to obtain the best value reasonably available to Smurfit-Stone stockholders. The court held, however, that plaintiffs failed to carry their burden to prove they were likely to succeed on the merits of their claims, would suffer imminent irreparable harm in injunctive relief was not granted, and were favored by the equities. Accordingly, plaintiffs' motion for a preliminary injunction was denied.