New Guidance On Confidentiality Agreements

A recent opinion regarding the enforcement of certain provisions commonly found in confidentiality agreements in the context of a hostile takeover provides important guidance on the drafting process of such agreements. In Martin Marietta Materials, Inc. v. Vulcan Materials Company, C.A. 7102-CS (Del. Ch. 2012), the Delaware Court of Chancery (Chancellor Strine) found that the use of information received by Martin Marietta Materials, Inc. ("Martin Marietta") under a confidentiality agreement in pursuit of a hostile bid to acquire Vulcan Materials Company ("Vulcan") violated that confidentiality agreement. The companies are the two largest construction materials suppliers in the United States. After a long history of discussions about a potential merger, Martin Marietta and Vulcan entered into a nondisclosure agreement (the "NDA"), and a common interest, joint defense and confidentiality agreement (the "JDA," together with the NDA, collectively, the "Confidentiality