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Delaware Chancery Court Addresses Standards of Review in Controlling Stockholder Freezeouts
May 28, 2010
In In re CNX Gas Corp. Shareholders Litigation, the Delaware Court of Chancery addressed the standard of review applicable to controlling stockholder freezeouts. In a departure from the standard applied in other Chancery Court decisions, the Court held that entire fairness applies to a controlling stockholder freezeout tender offer unless the tender offer is (i) negotiated and affirmatively recommended by a special committee of independent directors and (ii) conditioned on the affirmative tender of a majority of the minority shares.