Getting A Deal Done In Delaware Without Revlon

In its recent decision of Corwin v. KKR Financial Holdings LLC, the Delaware Supreme Court did two things. It affirmed that a court will not apply an entire fairness review to a merger transaction so long as the board is disinterested and the acquirer does not have "effective control," no matter how closely tied the acquirer is to the operations of the target company. Second, it championed the informed and uncoerced vote of a disinterested majority of shareholders as a cure for many sins of the M&A process, including the failure to follow Revlon.

In 2004, KKR & Co. LP, the well-known publicly traded investment company ("KKR"), formed KKR Financial Corp., a Maryland real estate investment trust ("KKR Financial"), which in 2005 engaged in a public offering. Then, in 2007, KKR Financial restructured so that it became a subsidiary of KKR Financial Holdings LLC, a publicly traded Delaware limited partnership ("KFN"). The subsequent going-private transaction in 2013-2014,