Richards Layton & Finger

Court of Chancery Preliminarily Enjoins Complete Genomics Acquisition

November 28, 2012

In In re Complete Genomics Shareholder Litigation, C.A. No. 7888-VCL (Del. Ch. Nov. 9, 2012), a recent decision by Vice Chancellor J. Travis Laster, the Court of Chancery preliminarily enjoined BGI-Shenzhen's acquisition of Complete Genomics Inc. pending supplemental disclosures concerning (1) discussions between the company's CEO and BGI's CEO regarding post-transaction employment and (2) clarification of inaccurately described and ambiguous provisions of the merger agreement. The Court of Chancery, however, denied the plaintiffs' request to issue an injunction based on challenges to the deal protection provisions, the change of recommendation provision and the no-waiver-of-standstill provisions despite the "significant issues of Delaware law" they raised. Instead, Laster ordered that the Complete Genomics board of directors must provide prompt notice to plaintiffs if the board considers whether it should change its recommendation or if any party to a standstill agreement makes a nonpublic request to be released from the agreement.