Is ‘Peppercorn’ No Longer Sufficient To Settle M&A Suits?

In Acevedo v. Aeroflex Holding Corp. (Del. Ch. Jul. 8, 2015), the Delaware Court of Chancery intentionally departed from the long-developing trend of mergers and acquisitions litigation settlements based only on merger agreement modifications and/or supplemental disclosures. The case is related to the acquisition by Cobham PLC of Aeroflex Holding Corp. Vice Chancellor J. Travis Laster declined to approve a proposed settlement in a class action, finding that modifications to certain deal protections (e.g., reduction in breakup fee and change in matching rights period) and supplemental disclosures were not sufficiently beneficial to the class to warrant an “intergalactic release” of claims for the defendants.