One year after the Siliconix/Glassman combination, the Delaware Chancery Court held in In
re Pure Resources that a tender offer is not coercive, and therefore the Siliconix safe harbor
applies, only if the offer is subject to a non-waivable majority of the minority tender condition;
the controller guarantees to consummate a prompt short-form merger at the same price if it
obtains more than 90% of the shares; and the controller makes no “retributive threats” in its
negotiations with the special committee.9 The court confirmed, however, that if these conditions
are met a freeze-out tender offer is not subject to entire fairness review.
2.2. Academic and practitioner commentary
Conventional wisdom among practitioners suggested that these doctrinal developments
would have a significant impact on freeze-out transactional form and outcomes. According to
the Wall Street Journal, “A couple of major court decisions handed down last year . . .
essentially permit those big holders to buy the minority investors out on the cheap.”10 And the
Corporate Control Alert stated: “The current thinking on minority buyouts, many lawyers say,
boils down to two words: tender offer.”11
Academic commentators have divided on how judges and policymakers should respond. At
one end of the spectrum, Cannon (2003), Resnick (2003), and Levy (2004) argue for doctrinal
convergence through entire fairness review for tender offer freeze-outs. Gilson & Gordon (2003)
propose a middle-ground approach that eliminates entire fairness review if the controller has
complied with the procedural protections identified in Pure Resources and the SC has veto
power over the transaction, but imposes entire fairness review if the controller goes directly to
The results presented in Part 4 support the view that the Siliconix/Glassman combination created a new doctrinal contour.
9 10 In re Pure Resources Shareholders Litigation, 808 A.2d 421 (Del. Ch. 2002). Robin Sidel, Takeover Targets Force Up Offers in ‘Minority Squeeze-Out’ Deals, WALL ST. J. (May 10, 2002) at C3.
David Marcus, Cleaning Up Your Corporate Structure, CORPORATE CONTROL ALERT, at 20 (July 2003).