Canning Plum Organics: The Avant-Garde Campbell Soup Company Acquisition and Delaware Public Benefit Corporations Wandering Revlon-Land
By: Sean W. Brownridge
In July 2013 the Governor of Delaware signed into law Sections 361-368 of the Delaware General Corporation Law, providing for the incorporation of mission-driven public benefit corporations. Section 365(a) requires that a board of directors manage or direct the business and affairs of the public benefit corporation in a manner that balances the pecuniary interests of the stockholders, the best interests of those materially affected by the corporation’s conduct, and the specific public benefit or public benefits identified in its certificate of incorporation. However, the Delaware Supreme Court’s 1986 holding in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., specifies that at a sale of the company a board must maximize the sale price of the enterprise for the benefit of the shareholders while continuing to perform its fiduciary duties. When a public benefit corporation enters Revlon-land, the statutory language provides no guidance to managers, directors, stockholders, and the Delaware courts on how the foregoing interests are intended to be balanced against one another. The language in the newly adopted Delaware public benefit corporation statute, the holding in Revlon, and Revlon’s progeny have therefore left several key questions unanswered when read together. The fundamental question being: what are the duties of directors at public benefit corporations when selling the company? In performing Section 365(a)’s statutorily imposed balancing act, may directors make an end-run around the maximization of the company’s value for the benefit of the shareholders at a sale of the company in favor of adopting a position, or accepting a bid, more hospitable to the company’s promoted public benefits? This Article seeks to answer these questions, among others, while simultaneously suggesting a more suitable framework that should apply with respect to public benefit corporations in Revlon-land.