Heracles holding Cerberus.
For those of you whose taste inclines to the intersection of ancient myth with modern law, Chancellor Chandler’s summary judgment opinion will thrill:
In classical mythology, it took a demigod to subdue Cerberus, the beastly three-headed dog that guarded the gates of the underworld. In his twelfth and final labor, Heracles journed to Hades to battle, tame, and capture the monstrous creature. In this case, plaintiff United Rentals, Inc. journeyed to Delaware to conquer a more modern obstacle that, rather than guards the gates to the afterlife, stands in the way of the consummation of a merger. Nevertheless, like the three heads of the mythological Cerberus, the private equity firm of the same name presents three substantial challenges to plaintiff’s case: (1) the language of the Merger Agreement, (2) evidence of the negotiations between the parties, and (3) a doctrine of contract interpretation known as the forthright negotiator principle. In this tale the three heads prove too much to overcome.
United Rentals, Inc. v. RAM Holdings, Inc., No. 3360-CC, slip op. at 1 (Del. Ch. Dec. 21, 2007) (footnotes omitted).
Nobody will mistake the opinion for epic poetry — thank the gods — but His Honor does get to the right outcome. The at best ambiguous language of the merger agreement — particularly in sections 8.2(e) and 9.10 — precluded a favorable summary judgment on URI’s claim for specific performance. Mainly because section 8.2(e) plainly entitles the acquirer to walk the deal by paying a $100 million break-up fee and section 9.10 makes specific performance rights explicitly "subject to" section 8.2(e).
The tri-nogginous hound of hell wins. As he should have. This time.
Barry Barnett
