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Delaware Court of Chancery Enjoins Unsolicited Offer For Violation of Confidentiality Agreement
May 7, 2012
In Martin Marietta Materials, Inc. v. Vulcan Materials Company, the Delaware Court of Chancery enjoined Martin Marietta from continuing its unsolicited exchange offer for, and proxy contest against, Vulcan for four months because Martin Marietta violated its confidentiality agreement with Vulcan. This confidentiality agreement was entered into at a time when the two parties were focused on a potential friendly merger. When discussions failed, however, and Martin Marietta decided to make a public, unsolicited exchange offer for Vulcan, the confidential information obtained pursuant to the confidentiality agreement, including the amount of anticipated synergies, became central to the conduct of Martin Marietta's campaign. While the decision by Chancellor Strine ultimately turned on well-established principles of contract interpretation, the decision underscores the subtle ways that confidentiality agreements can impose standstill obligations even absent express standstill provisions.