M&A Update: No Control, No Conflict, No Problem

On October 24^th, the Delaware Chancery Court dismissed a lawsuit challenging the merger of Crimson Exploration and Contango Oil & Gas. Minority Crimson stockholders alleged that Oaktree Capital Management, Crimson's largest stockholder with a 33.7% stake, controlled Crimson and caused it to be sold below market value for "self-serving reasons." The Court disagreed, finding that even if Oaktree was a controlling stockholder—which was likely not the case—the merger should be reviewed under the deferential business judgment rule, and not the more stringent entire fairness standard, because Oaktree was not conflicted in the transaction. The Court concluded that the Crimson directors had not breached their fiduciary duties, and the case was dismissed.