On March 7, 1986, the Nebraska Supreme Court decided ConAgra, Inc. v. Cargill, Inc. and issued a per curiam opinion. With this decision, the Nebraska Supreme Court entered one of the most controversial areas of modern corporate law—deciding what is the proper role for the directors of a target corporation in a takeover struggle. This essay's interpretation is that ConAgra allows a corporation to pledge its directors' and officers' best efforts in a merger agreement and permits its directors to consider fairly the interests of all constituents of the corporate enterprise, including, but not limited to, the shareholders. ConAgra, properly understood, merely interpreted the "best efforts" clause in the ConAgra-MBPXL merger agreement. The court determined that this "best efforts" clause explicitly permitted the MBPXL directors to maximize the shareholders value by acting as auctioneers for their interests. The court's underlying premise for this holding is that a corporation, may, when there are no other concerned corporate constituents, make such a merger agreement.
Stephen E. Kalish,
ConAgra, Inc. v. Cargill, Inc., an Interpretive Essay: A Target Corporation May, But Need Not, Agree That Its Directors Serve as Auctioneers for Its Shareholders,
65 Neb. L. Rev.
Available at: http://digitalcommons.unl.edu/nlr/vol65/iss4/9