In Re Wheelabrator Technologies, Inc. v. Shareholders Litigation

663 A.2d 1194 (Del.Ch. 1995)

Facts

Waste Management, Inc. and Wheelabrator Technologies (D) were both in the waste management business. In 1988 Waste bought 22% of D and elected four of its own directors to serve on D's 11-person board. In 1990 for reasons unknown, Waste and D negotiated a merger in which Waste would acquire another 33% of D's stock, and D shareholders would get .574 D shares and .469 Waste shares for each D share they held. D's board held a special meeting. All members other than the four Waste board members were in attendance and they analyzed a report by Lazard Freres and Saloman Brothers, heard investment bankers and D's attorneys; all of whom said that the transaction was fair. The seven directors then unanimously approved the merger agreement. A proxy statement was then distributed explaining the transaction to D's shareholders. The shareholders by a majority of votes approved the merger; this even with not counting Waste's votes. P sued D arguing that Ds breached their duty of disclosure because the proxy statement was materially misleading. P contends that the transaction was not carefully considered as the disinterested board members only had three hours to consider and approve the merger.