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


A confidentiality agreement is intended and structured to prevent a contracting party from using and disclosing the other party's confidential, nonpublic information except as permitted by the agreement. In that respect it is qualitatively distinguishable from a prohibition that precludes a party categorically from engaging in specified hostile takeover activity. Thus, a confidentiality agreement will not typically preclude a contracting party from making a hostile bid to acquire control of the other party, so long as the bid does not involve the use or disclosure of the other party's confidential, nonpublic information. 


A large manufacturer that was engaged in merger negotiations, brought litigation against defendant competitor, the other party in the negotiations. The Court of Chancery of the State of Delaware entered judgment in favor of the competitor on its counterclaims, and entered an injunction against the plaintiff manufacturer. The Court of Chancery enjoined the manufacturer, for a four month period, from continuing to prosecute its pending exchange offer and proxy contest to acquire control of the competitor. The court found the manufacturer had violated of two contracts between the parties: a nondisclosure letter agreement and a common interest, joint defense and confidentiality agreement. Pursuant to the agreement, the competitor had provided the manufacturer with nonpublic information, which the latter used and disclosed in preparing its exchange offer and proxy contest for a hostile takeover, seeking to oust some of the competitor's board members. The manufacturer appealed.


Did the manufacturer violate the nondisclosure letter agreement and confidentiality agreement?




On appeal, the court agreed with the lower court that the unambiguous agreements were true confidentially agreements, not standstill agreements. The injunction properly precluded the manufacturer from using and disclosing such confidential, nonpublic information, except insofar as the agreements themselves permitted.

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