The Delaware Court of Chancery found that potential topping offers for a target company were not precluded by the presence of standstill provisions contained in non-disclosure agreements and a stockholders rights plan (the "Plan"). The target company, after engaging in a sale process, entered into an acquisition agreement. The standstill provisions and the Plan were alleged by the contesting parties to constitute impermissible deal protection measures. The standstill provisions required potential bidders to commence a tender offer in order to make a topping offer. The contesting parties further alleged that announcing a tender offer would trigger the dilutive protections contained in the Plan (from which only the purchaser under the acquisition agreement was exempt).
The court found the allegations of the contesting parties to be inaccurate. The dilutive protections contained in the Plan become operative only when a person actually acquired 20% of the target company's stock, rather than upon the announcement of a tender offer. Thus, if a topping offer was made and found superior by the target company, the target company would not be precluded from accepting such offer under the Plan and exempting the maker of the offer from the Plan.
In re Bioclinica, Inc. Shareholder Litig., C.A. No. 8272-VCG (Del. Ch. Feb. 25, 2013).