Thursday, November 21, 2013

Ace Limited v. Capital Re Corp. case brief

Ace Limited v. Capital Re Corp. case brief summary
747 A.2d 95 (2000)

Plaintiff filed a motion for a temporary restraining order in plaintiff's action to enjoin defendant from terminating the parties' merger agreement.

Plaintiff company entered into a merger agreement with defendant corporation. Bargaining over the circumstances in which defendant's board would consider a third party's acquisition or merger proposal and/or terminate the merger agreement resulted in both a "no talk" provision restraining defendant's officer, directors, and agents from considering a third-party proposal, and a termination provision that required defendant to pay plaintiff a $ 25 million termination fee.


  • The court denied the motion because, on its analysis of the merits, defendant would not likely prevail in that its interpretation of the "no-talk" provision was disfavored by Delaware law, which disallowed defendant's directors to contract away their fiduciary duty to decide whether they should enter into acquisition/merger discussions with a third party. 
  • The court also denied because while the plaintiff showed irreparable harm, that threat did not outweigh the threat to defendant's stockholders if delay caused the "auction" price to spiral down rather than up.


The court denied plaintiff's motion for a temporary restraining order because plaintiff's interpretation of the "no-talk" provision of the parties' merger agreement meant that plaintiff would not likely to prevail on the merits, and harm to defendant's stockholders by the court-imposed delay tipped the equities against plaintiff.

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