Mesa Petroleum Co. 493 A.2d 946 (Del. 1985). 117. Id. at 17 n.69. 956 SUFFOLK UNIVERSITY LAW REVIEW [Vol. XXXVII:927 compliance with contractual duties effectively displaced default fiduciary duties.
Mesa Petroleum Co. 493 A.2d 946 (Del. 1985) (approving a defensive issuer self-tender offer that excluded Mesa Petroleum, which was then making a bid for Unocal). XXXXXXXXXXX XXXXX & XXXXXXXX LETTERHEAD
Mesa Petroleum Co. 493 A. 2d 946 (Del. 1985). The Delaware Supreme Court has confirmed that the Unocal enhanced judicial scrutiny is applicable to a Delaware court’s evaluation of deal protection measures designed to protect a merger agreement. The Delaware Supreme Court has also held that the initial burden is on the target company directors to demonstrate that (1) they had reasonable grounds for believing that a threat to corporate policy and effectiveness existed and (2) that they took action in response to the threat that was neither coercive nor preclusive and that was within a range of reasonable responses to the threat perceived. Omnicare Inc. v. NCS Healthcare, Inc., 818 A.2d 914 (Del. 2003). In addition, if the board is relying on the post-signing period as a market check in a merger that constitutes a sale of control, the deal protection provisions may be subject to heightened scrutiny under the Revlon doctrine. If a target board reasonably concludes that a merger provides enhanced stockholder value, the board may conclude in the exercise of its business judgment that contractual provisions such as a no-shop clause, a breakup fee, a force-the-vote provision, or a voting agreement with one or more significant stockholders are necessary to induce a bidder to agree to the desirable business combination. Because these provisions may deter or preclude alternative bids which may offer a better price to the stockholders, the target board must analyze these provisions to determine that they are not so broadly drawn that they would deter competing bids offering substantially greater value to the stockholders.
