Martin Marietta Materials, Inc. v. Vulcan Materials Co. Case Brief Summary | Law Case Explained

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Martin Marietta Materials, Inc. v. Vulcan Materials Co. | 68 A.3d 1208 (2012)

During friendly merger talks, the parties involved typically share confidential information with each other under the expectation that it will be kept confidential and used only to evaluate the merger. But what happens if a party were to use this information to attempt a later hostile takeover? We consider this question in Martin Marietta Materials versus Vulcan Materials.

Martin Marietta Materials and Vulcan Materials were the two largest companies in the construction-aggregates industry. In April of twenty ten, the two companies began merger talks. To keep their talks confidential, the companies entered into a nondisclosure agreement and a joint-defense agreement.

The confidentiality agreements included strict provisions preventing the unauthorized use or disclosure of confidential evaluation materials. Such materials could only be used or disclosed to complete the transaction or if the parties were legally required to do so. The agreements also established a notice-and-vetting process for the disclosure of confidential information.

After about a year of negotiations, Martin launched a hostile takeover bid to acquire Vulcan. In December of twenty eleven, Martin sent Vulcan an unsolicited offer to buy the company at a significant premium, known as a bear hug letter, and filed a Form S-Four with the Securities and Exchange Commission. In conjunction with its bid, Martin disclosed Vulcan’s confidential information both publicly and to advisors.

Martin brought an action in the Delaware Court of Chancery, seeking a declaration that the nondisclosure agreement didn’t bar its hostile takeover attempt. Martin argued that it was permitted to use the evaluation materials to conduct a hostile bid and that its disclosures were legally required. Vulcan counterclaimed for a determination that Martin breached the nondisclosure and joint-defense agreements.

The court found that Martin had violated the agreements and enjoined it from proceeding with its takeover for four months. Martin appealed to the Delaware Supreme Court.

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