SC to veto the deal – the most it can do is issue a recommendation to the minority against
provides at least one source of differentiation between
merger doctrine and tender offer doctrine that makes Hypothesis H1 a plausible hypothesis
across all states.
Judicial standards of review present a less clear source of differentiation outside of Delaware.
To my knowledge no other state has articulated a standard of review for the first-step tender
offer, though it seems likely that other states would follow Siliconix on the theory that a tender
offer does not involve board action, and therefore does not trigger fairness review. The back-
end short-form merger is a closer call. Here, the controller is making use of the statutory
framework that might plausibly trigger fairness review under the corporate code of other states.
In Yanow v. Teal Industries,16 the Connecticut Supreme Court held that fairness review does not
apply to a back-end short-form merger, as the Delaware Supreme Court would hold in Glassman
twenty-two years later. No other state court seems to have addressed the standard of review
question for the back-end short-form merger. This absence of case law is not surprising in view
of the fact that even Delaware did not address this question until 2001.
If subsequent courts hold that short-form mergers are subject to entire fairness review, the
only source of differentiation between the tender offer mechanism and the merger mechanism is
the SC’s ability to veto the deal. If instead other states explicitly or implicitly follow Siliconix
and Glassman, the two differences in SC bargaining power that exist in Delaware are also
present in these other states. I therefore present results throughout this paper for all targets, and
178 Conn. 263, 422 A.2d 311 (1979).