The El Paso/Kinder Morgan Opinion: Further Delaware Guidance on Sell-side Conflicts

In its recent decision regarding the acquisition of El Paso Corporation by Kinder Morgan, Inc., the Delaware Chancery Court concluded that El Paso’s sale process may have been tainted by conflicts of interest affecting the company’s CEO and financial advisors. The court nevertheless denied plaintiffs’ request for a preliminary injunction on the grounds that enjoining the deal in the absence of a competing bid would pose a significant risk for El Paso shareholders who would have their own chance to judge the merits of the deal at a shareholder meeting. As described in the accompanying memorandum, the opinion, authored by Chancellor Strine, provides guidance, and simultaneously raises a number of questions, regarding how to approach relationships and interests that risk giving rise to conflict of interest allegations against directors, officers and financial advisors.