Yes and no, respectively, according to Vice-Chancellor Strine of Delaware. Martin Marietta Materials (MMM) and Vulcan Materials (VM) entered into a confidentiality agreement with a view to concluding a friendly combination. There was no express standstill agreement. MMM then appeared to change its tune, relying on confidential information (CI) derived from the earlier discussions to mount a hostile take-over bid. VM objected, saying that their agreement precluded use of CI for a purpose other than a transaction ‘between the parties’, the word ‘between’ connoting reciprocity and excluding a hostile bid. MMM contended that ‘between’ meant simply ‘involving’ or ‘linking’, not necessarily in a friendly way.
Strine VC thought both were plausible readings, but preferred VM’s on the strength of the context of the parties’ dealings, good old lexicography and the Ontario decision in Certicom Corp v Research in Motion Ltd (2009) 94 OR (3d) 511. In Certicom, the court concluded that use of ‘between’ implied some degree of reciprocity or mutuality. Strine VC noted that MMM’s counsel would certainly have known about the ‘between’ issue as a result of widespread coverage of Certicom in the M&A world. Because MMM’s use of CI for its hostile bid was not contemplated under the agreement with VM, the latter’s request for specific performance of the agreement and injunctive relief against misuse of the CI was granted, in effect turning the confidentiality agreement into a standstill: Martin Marietta Materials Inc v Vulcan Materials Co, 2012 Del Ch LEXIS 93. MMM has appealed: watch this space.
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