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Business Associations Keyed to Coffee, 9th Ed.
Ace Limited v. Capital Re Corp.
Citation:
747 A.2d 95 (2000)Facts
In June 1999, ACE Limited and Capital Re entered into a merger agreement where Capital Re stockholders would receive 0.6 shares of ACE stock for each Capital Re share. ACE already owned 12.3% of Capital Re’s stock and had secured voting agreements with stockholders holding another 33.5%, effectively controlling nearly 46% of the vote. The merger agreement contained a “no-talk” provision in Section 6.3 that prohibited Capital Re from discussing competing offers unless its board concluded, based on written advice from outside counsel, that such discussions were required to fulfill fiduciary duties. By October 1999, ACE’s stock price had fallen significantly, reducing the value of the merger consideration. On October 6, 2019, one day before the scheduled stockholder vote, XL Capital offered to purchase Capital Re for $12.50 per share in cash, which was substantially higher than the value of the ACE merger. Capital Re’s board determined that it had a fiduciary duty to consider this superior offer and eventually received an increased offer of $14.00 per share from XL Capital. When Capital Re notified ACE of its intent to terminate the merger agreement, ACE sought a TRO to prevent termination.
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