Thomas & Betts Corporation v. Leviton Manufacturing Co., Inc.

Facts

Thomas & Betts (Plaintiff), a New Jersey electronics corporation, showed an interest in a possible union with Leviton Manufacturing (Leviton) (Defendant), a Delaware corporation and manufacturer of electronic components. The company’s (Defendant) President and CEO, Harold Leviton, was also a majority stockholder and he controlled a voting trust of 76.45 percent of Defendant’s Class A stock. Plaintiff sought to acquire a minority of shares in Leviton (Defendant) in order to attempt a merger between the two companies. Plaintiff entered into secret negotiations with Thomas Blumberg and his wife, members of the Leviton family, who owned 29.1 percent of Leviton’s (Defendant) stock. Plaintiff purchased the Blumberg’s stock for $50 million, with the potential to receive another $20 million if the sale were completed. When Harold Leviton was informed of the sale, he attempted to repurchase the shares sold by Blumberg. Thomas & Betts (Plaintiff) executed a formal written demand for inspection of Defendant’s corporate books and records. A final offer of $250 million for Defendant’s remaining shares was extended. Defendant rejected both the offer to purchase the shares and the demand for inspection. Plaintiff initiated suit to compel the inspection. The Court of Chancery narrowly limited the scope of Plaintiff’s inspection of Defendant’s records for valuation purposes only. Plaintiff appealed.