Current Month (August 2026)
Delaware Court of Chancery Finds Acquirer Caused Missed Closing Deadline, Grants Specific Performance of Merger Agreement
By K. Tyler O’Connell, Morris James LLP
In Verisk Analytics, Inc. v. Exactlogix, Inc., C.A. No. 2026-0023-BWD, 2026 WL 2280818 (Del. Ch. Aug. 7, 2026), the Delaware Court of Chancery held after an expedited trial that, under the parties’ merger agreement and the facts of the case, the failure to obtain antitrust approval by the closing deadline did not permit an acquirer to terminate the merger.
The parties agreed to a prompt closing because they did not expect significant antitrust scrutiny. As Vice Chancellor Bonnie W. David explained, the parties were not competitors and “did not have a vertical supplier-customer relationship.” As a factual matter, however, the acquirer decided not to continue to provide certain “enhanced” services to one of its customers that competed with the target. Unbeknownst to the parties, the Federal Trade Commission (“FTC”) had spoken with the customer about the cessation of those “enhanced” services. The conversation led the FTC to investigate and analyze a “market reset theory” that focused on the incentives post-merger not to provide services to potential competitors.
The FTC’s information requests asked about anticipated cessations of services to customers. The acquirer’s responses omitted mention of the customer at issue because, it later explained, it expected to continue to provide that customer with other, standardized services. But in any event, at trial, it was shown that the acquirer’s failure to respond with the information the FTC requested caused the FTC to seek more information as part of a longer-than-expected review process. The FTC did not approve the merger by the closing date.
The merger agreement provided that a party could not exercise a termination right if the terminating party itself was in “material breach” of the merger agreement or if its “other willful conduct” was the “primary cause” of the failure to satisfy a closing condition. The Court of Chancery reasoned, inter alia, that the “willful conduct” standard required only “voluntary and intentional” conduct. In this regard, the Court agreed with the acquirer that, unlike in many broken deal cases, the record did not support the acquirer acted intentionally to delay or prevent closing. The Court reasoned, however, that the “willful conduct” standard did not require a culpable state of mind. The Court also found, as a factual matter, the acquirer’s conduct was the “primary cause” of the longer-than-expected FTC investigation.
The Court of Chancery accordingly granted specific performance and required the acquirer to perform under the merger agreement, including by using “commercially reasonable efforts” to obtain antitrust clearance and to close the merger if the FTC approves the transaction. In so ruling, the Court also rejected the acquirer’s argument that the target’s communications with other potential acquirers, after the acquirer’s purported termination of the merger, was itself a “material breach” of the merger agreement’s exclusivity provisions that should render specific performance unavailable.
Tyler O’Connell is a Partner at Morris James LLP in Wilmington, Delaware. Any views expressed herein are not necessarily those of the firm or any of its clients.
Delaware Court of Chancery Upholds LLC Members’ Waiver of Statutory Rights to Inspect Company Books and Records
By K. Tyler O’Connell, Morris James LLP
In Bengson v. Elevate RCM Holdings, LLC, C.A. No. 2025-1347-DG, 2026 WL 2409798 (Del. Ch. Aug. 10, 2026), the Delaware Court of Chancery held in a post-trial decision that, under the governing limited liability company agreement, plaintiff limited liability company members waived their default statutory rights under 6 Del. C. § 18-305 to inspect the company’s books and records.
The members were sellers of a business whose consideration included membership interests in the acquirer’s LLC. The governing LLC agreement provided clearly that members agreed to waive any inspection rights under Section 305 of the Delaware LLC Act. Magistrate Judge Danielle Gibbs reasoned that the Delaware LLC Act does not prohibit waiver of statutory inspection rights via a clear LLC agreement provision. The Court explained that “[b]arring sufficient public policy concerns or express statutory language prohibiting a waiver, sophisticated parties may contractually waive a statutory right in exchange for valuable consideration.” The Court cited Manti Hldgs., LLC v. Authentix Acq. Co., Inc., 261 A.3d 1199, 1219–21 (Del. 2021), in which the Delaware Supreme Court upheld a waiver of statutory appraisal rights in a stockholders’ agreement. The Court further reasoned that the express policy of the LLC Act is to “give the maximum effect to the principle of freedom of contract and to the enforceability of limited liability company [operating] agreements.” 6 Del. C. § 18-1101(b). The Court explained, “For such a waiver to be enforceable, it must be clear and unequivocal, and the waiving party must know of the requirement or condition they are agreeing to waive.”
Tyler O’Connell is a Partner at Morris James LLP in Wilmington, Delaware. Any views expressed herein are not necessarily those of the firm or any of its clients.
