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Vulcan Materials answers and counterclaims

Vulcan Materials answers and counterclaims

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Published by DealBook

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Categories:Business/Law
Published by: DealBook on Dec 21, 2011
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12/21/2011

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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
MARTIN MARIETTA MATERIALS, INC.,Plaintiff,v.VULCAN MATERIALS COMPANY,Defendant.C.A. No. 7102-CS
ANSWER AND COUNTERCLAIMS OF VULCAN MATERIALS COMPANY
Defendant Vulcan Materials Company (“Vulcan”), by its undersigned attorneys,answers as follows the allegations of the Verified Complaint for Declaratory Judgmentand Injunctive Relief (the “Complaint”) filed by the plaintiff, Martin Marietta Materials,Inc. (“Martin Marietta”), and asserts its own counterclaims against Martin Marietta.Except for those allegations expressly admitted herein, Defendants deny each and everyallegation in the Complaint.
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INTRODUCTION
This action arises out of Martin Marietta’s unlawful scheme to pursue a hostiletakeover of Vulcan through the wrongful use of Vulcan’s confidential information.Martin Marietta made and has breached an unambiguous contractual commitment to
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Except as otherwise defined herein, the defined terms in the Complaint areincorporated herein by reference. Defendants deny that the headings and the prayers for judgment contained in the Complaint constitute allegations of fact, and deny them to theextent that they are considered as such.
 
 
2maintain in confidence sensitive and proprietary information received from Vulcanregarding Vulcan’s business and operations, as well as the fact of the parties’ longnegotiations regarding a consensual transaction. Martin Marietta now comes to thisCourt, with unclean hands, seeking a declaration in equity that would bless its purposefulbreach of contract. The Complaint is without merit.As detailed herein, with the assured protection of the parties’ confidentialityagreement, Vulcan provided to Martin Marietta nonpublic, highly sensitive commercialdata about Vulcan’s business operations — information that goes to the very heart of Vulcan’s competitive interests. Martin Marietta then used the information in clearviolation of contractual promises it made to Vulcan in May 2010 when the twocompanies began to explore in earnest a negotiated merger transaction. In the periodsince, Martin Marietta collected information from Vulcan under the false pretense that itwould respect its contractual undertakings, and then violated those contractualundertakings by misusing Vulcan’s confidential information in the preparation of itshostile attack. Martin Marietta’s conduct constitutes not only breaches of expresscontractual obligations, but it offends basic principles of business ethics and fair dealingas well.As detailed in this pleading, Vulcan and Martin Marietta engaged in privatenegotiations regarding a potential consensual merger beginning in early 2010. The twocompanies are national leaders in the production of construction aggregates, includingcrushed stone, sand, and gravel, and both realized that a transaction could carry potentialbenefits. To facilitate these consensual merger talks, Martin Marietta and Vulcan entered
 
 
3into a letter agreement concerning confidentiality, use restrictions, and other terms datedMay 3, 2010 (the “Letter Agreement”). Talks between the parties regarding a consensualdeal continued for more than a year.When Vulcan did not agree to a transaction on the terms that Martin Marietta hadsought, Martin Marietta violated its contractual undertakings by misusing the informationprovided to prepare a hostile attack. With the benefit of Vulcan’s valuable and nonpublicinformation, Martin Marietta announced on December 12, 2011 that: (a) it wascommencing an exchange offer for Vulcan shares and (b) it intends to mount a proxycontest to elect a dissident slate of Martin Marietta-backed directors to Vulcan’s board.Well aware that its conduct constituted a breach of the Letter Agreement, Martin Mariettaran into this Court on the same day it launched its hostile bid seeking a counterfactualdeclaration that its conduct was not prohibited by the Letter Agreement.For the reasons detailed in the Counterclaims, Martin Marietta’s claims for relief cannot be sustained — its conduct
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prohibited by the Letter Agreement. MartinMarietta violated the Letter Agreement by using confidential Vulcan information toformulate and plan an unsolicited exchange offer to Vulcan’s stockholders, and thenagain by disclosing Vulcan’s protected confidential information in public filings andexchange offer documents. Vulcan would never have agreed — and did not agree — toturn over its sensitive internal documents to a competitor without contractual assurancethat the information could not be used offensively against Vulcan in support of a hostileoffer.

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