What 1986 Delaware Supreme Court case held that directors must seek the highest price in a sale?

The 1986 Delaware Supreme Court case holding that directors must seek the highest price in a sale was Revlon, Inc. v. MacAndrews & Forbes Holdings.

The case arose from Pantry Pride’s hostile takeover attempt for Revlon. Revlon’s board adopted defensive measures and later negotiated a lock-up agreement with Forstmann Little. The court held that once the company’s sale or breakup became inevitable, the directors’ role changed: they had to focus on obtaining the best value reasonably available for shareholders rather than protecting other constituencies or favoring one bidder.

This principle is commonly called the Revlon duty. It does not mean directors must accept the first or highest cash offer mechanically, nor does it apply to every ordinary business decision. The board may consider deal certainty, timing, financing, regulatory risk, and other factors relevant to value.

The decision is often confused with Unocal, which concerns defensive takeover measures, and Smith v. Van Gorkom, which addressed an uninformed board decision approving a merger.