Smith v. Van Gorkom (reprise)

5/20/2025 pdw

Let's return to Smith v. Van Gorkom. Recall that in this case the CEO of Trans Union negotiated to sell the company to Jay Pritzker. The CEO and the board approved the deal without ever asking what the company was worth, which violated the duty of care.

Here, we'll look back on the board's communication with the stockholders. Recall that shareholders need to approve a merger. As part of this process, the board provides shareholders with a proxy statement that provides important information about the deal.

The exerpt of the opinion below holds that the board breached their duty of candor to the shareholders by not disclosing accurately how little they had studied out the fair price of the company.

Supreme Court of Delaware

488 A.2d 858

1985-03-14

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