Mills Acquisition Co. v. Macmillan

ANDREW G.T. MOORE, II, Justice In this interlocutory appeal from the Court of Chancery, we review the denial of injunctive relief to Mills Acquisition Co., a Delaware corporation, and its affiliates Tendclass Limited and Maxwell Communications Corp., PLC, both United Kingdom corporations substantially controlled by Robert Maxwell. 1 plaintiffs sought control of MacMillan, Inc. ("Macmillan" or the "company"), and moved to enjoin an asset option agreement -- commonly known as a "lockup" -- between MacMillan and Kohlberg Kravis Roberts & Co. ("KKR"), an investment firm specializing in leveraged buyouts. The lockup was granted by Macmillan's board of directors to KKR, as the purported high bidder, in an "auction" for control of MacMillan. Although the trial court found that the conduct of the board during the auction was not "evenhanded or neutral," it declined to enjoin the lockup agreement between KKR and MacMillan. That action had the effect of prematurely ending the auction before the board had achieved the highest price reasonably available for the company. Even though the trial court found that KKR had received improper favor in the auction, Including a wrongful "tip" of Maxwell's bid by MacMillan's chairman of the board and chief executive officer, and that MacMillan's board was uninformed as to such clandestine advantages, the Vice Chancellor nevertheless concluded that such misconduct neither misled Maxwell nor deterred it from submitting a prevailing bid.