Louis S. Gimbel, III, Plaintiff v. The Signal Companies, Inc., Signal Oil & Gas Company, Burmah Oil Co. Ltd., Burmah Oil Incorporated, Forrest N. Shumway, William E. Walkup and those of the following directors of The Signal Companies, Inc., who, on December 21, 1973, voted in favor of the sale of stock of Signal Oil and Gas Company: Brewster L. Arms, Andrew J. Chitiea, Zenon C. R. Hansen, Donald C. McHone, George Melamid, James E. Patrick, Harold M. Williams, Robert O. Reynolds, Clinton R. Stevenson, Willis H. Thompson, Jr., Harry H. Wetzel, and Arch Monson, Jr., Defendants, 316 A.2d 599

Summary

Plaintiff sought to prevent the sale of all capital stock in defendant's oil company subsidiary on the grounds that the agreed upon price was greatly inadequate. The court found that the sale of the oil company stock did not constitute the sale of all or substantially all of defendant's assets and therefore, plaintiff's argument that the sale violated Del. Code Ann. tit. 8, § 271(a), had no reasonable probability of success on the merits. However, the court also found that plaintiff had a reasonable prospect of success on the merits since the record indicated a gross disparity between the fair market value and the agreed upon sale price. The court determined that while the circumstances under which defendant had made the sale decision were not enough to raise a reasonable probability that plaintiff would be able to pierce the business judgment standard, the discrepancies in the values of the company asserted by the parties were so great that an immediate comprehensive investigation ...