Delaware Speaks on Confidentiality Agreements — But Will it Change its Mind Later this Month?

Two blog entries earlier this week reported on confidentiality agreements and the groundbreaking decision handed down earlier this month by the Delaware Chancery Court in the Martin Marietta Materials - Vulcan Materials struggle.

Now for some analysis of where we stand at halftime.

I say "halftime" because Martin Marietta won't surrender, at least not yet.  Perhaps that is due to the inflated ego of its CEO (I am just quoting street talk, I don't have a personal opinion about the man), or perhaps to the need to try to salvage something — at least reputation — from the current fiasco and the huge sums MM must have expended so far in this debacle.  Plus, to be fair, Martin Marietta is likely right on this business point: a merger with Vulcan WOULD generate highly valuable synergies, almost immediately raising the net profit of the combined company, so MM cannot bear to forfeit the game.  Instead, it has to regroup at halftime and win the final two quarters.

Neither MM nor Vulcan will have long to wait for the second half kickoff.

MM fumbled the ball in the last two minutes of the first half, when it tried a Hail Mary approach to the Chancery Court in pleading for it to stay its decision pending MM's appeal to the Delaware Supreme Court.  The Chancery Court denied the motion on May 14 — to do otherwise would have been to partially reverse itself, given the impending Vulcan AMS, so who is surprised? — and on the same day entered an order enforcing its May 4th decision in its entirety, requiring MM to immediately terminate and withdraw its exchange offer, proxy materials, HSR filing and Vulcan board nominations.

But, of course, all that is just scenery, and MM and Vulcan had to know it.  The key issue now is MM's appeal, which it announced on May 7, and now MM could seek —and it has obtained — an expedited or accelerated hearing of its appeal before the Delaware Supreme Court.

Although the original date for oral argument has been pushed back, MM will still get to appear in front of the Delaware Supreme Court prior to the Vulcan AMS.  Just one day before, on May 31, but if the MM attorneys somehow manage to drive the ball 95 in three plays and kick the tying PAT with no time left on the clock, it is possible the Court will order a postponement of the Vulcan AMS scheduled for June 1.

So regardless of how the rest of the game progresses, we attorneys will finally get some real case law from Delaware on confidentiality agreements in merger and acquisition contexts.


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