In Re Del Monte Foods Co. Shareholders Litigation

OPINION

On November 24, 2010, Del Monte Foods Company (“Del Monte” or the “Company”) entered into an agreement and plan of merger with Blue Acquisition Group, Inc. and its wholly owned acquisition subsidiary, Blue Merger Sub Inc. (the “Merger Agreement” or “MA”). Blue Acquisition Group is owned by three private equity firms: Kohlberg, Kravis, Roberts & Co. (“KKR”), Centerview Partners (“Cen-terview”), and Vestar Capital Partners (“Vestar”). Because KKR is the lead firm, I generally refer to the sponsor group as “KKR.” The Merger Agreement contemplates a $5.3 billion leveraged buyout of Del Monte (the “Merger”). If approved by stockholders, each share of Del Monte common stock will be converted into the right to receive $19 in cash. The consideration represents a premium of approximately 40% over the average closing price of Del Monte’s common stock for the three-month period ended on November 8, 2010. The $19 price is higher than Del Monte’s common stock has ever traded.

The stockholders of Del Monte are scheduled to vote on the Merger on February 15, 2011. The plaintiffs seek a preliminary injunction postponing the vote. They originally asserted that the individual defendants, who comprise the Del Monte board of directors (the “Board”), breached their fiduciary duties in two separate ways: first by failing to act reasonably to pursue the best transaction reasonably available, and second by disseminating false and misleading information and omitting material facts in connection with the stockholder vote. The defendants mooted the disclosure claims through an extensive proxy supplement released during the afternoon of February 4, 2011 (the “Proxy Supplement”).

This case is difficult because the Board predominantly made decisions that ordinarily would be regarded as falling within the range of reasonableness for purposes of enhanced scrutiny. Until discovery disturbed the patina of normalcy surrounding the transaction, there were only two Board decisions that invited serious challenge: first, allowing KKR to team up with Ves-tar, the high bidder in a previous solicitation of interest, and second, authorizing Barclays Capital, the financial advisor to Del Monte, to provide buy-side financing to KKR.

Discovery revealed a deeper problem. Barclays secretly and selfishly manipulated the sale process to engineer a transaction that would permit Barclays to obtain lucrative buy-side financing fees. On multiple occasions, Barclays protected its own interests by withholding information from the Board that could have led Del Monte to retain a different bank, pursue a different alternative, or deny Barclays a buy-side role. Barclays did not disclose the behind-the-scenes efforts of its Del Monte coverage officer to put Del Monte into play. Barclays did not disclose its explicit goal, harbored from the outset, of providing buy-side financing to the acquirer. Barclays did not disclose that in September 2010, without Del Monte’s authorization or approval, Barclays steered Vestar into a club bid with KKR, the potential bidder with whom Barclays had the strongest relationship, in violation of confidentiality agreements that prohibited Ves-tar and KKR from discussing a joint bid without written permission from Del Monte.

Late in the process, at a time when Barclays was ostensibly negotiating the deal price with KKR, Barclays asked KKR *818 for a third of the buy-side financing. Once KKR agreed, Barclays sought and obtained Del Monte’s permission. Having Barclays as a co-lead bank was not necessary to secure sufficient financing for the Merger, nor did it generate a higher price for the Company. It simply gave Barclays the additional fees it wanted from the outset. In fact, Barclays can expect to earn slightly more from providing buy-side financing to KKR than it will from serving as Del Monte’s sell-side advisor. Barclays’ gain cost Del Monte an additional $8 million because Barclays told Del Monte that it now had to obtain a last-minute fairness opinion from a second bank.

On the preliminary record presented in connection with the injunction application, the plaintiffs have established a reasonable probability of success on the merits of a claim for breach of fiduciary duty against the individual defendants, aided and abetted by KKR. By failing to provide the serious oversight that would have checked Barclays’ misconduct, the directors breached their fiduciary duties in a manner reminiscent of Mills Acquisition Co. v. Macmillan, Inc., 559 A.2d 1261 (Del.1989). In that decision, the Delaware Supreme Court enjoined a transaction — ironically a leveraged buyout sponsored by KKR— when self-interested management and their financial advisor concealed information from the board. Like management’s deal-specific, buy-side conflict in Mills, Barclays’ deal-specific, buy-side conflict tainted the advice it gave and the actions it took.

To hold that the Del Monte directors breached their fiduciary duties for purposes of granting injunctive relief does not suggest, much less pre-ordain, that the directors face a meaningful threat of monetary liability. On this preliminary record, it appears that the Board sought in good faith to fulfill its fiduciary duties, but failed because it was misled by Barclays. Unless further discovery reveals different facts, the one-two punch of exculpation under Section 102(b)(7) and full protection under Section 141(e) makes the chances of a judgment for money damages vanishingly small. The same cannot be said for the self-interested aiders and abetters. But while the directors may face little threat of liability, they cannot escape the ramifications of Barclays’ misconduct. For purposes of equitable relief, the Board is responsible.

To remedy (at least partially) the taint from Barclays’ activities, the plaintiffs ask that the vote on the Merger be enjoined for a meaningful period (30 to 45 days) and that the parties to the Merger Agreement be enjoined from enforcing the deal protections during that time. They have not sought (nor would I grant) a decree enjoining the Merger pending a post-trial adjudication. The plaintiffs argue that this limited injunctive relief will restore (albeit incompletely) the stockholders’ unique opportunity to receive a topping bid free of fiduciary misconduct. Such an injunction would deprive KKR temporarily of the advantages it obtained by securing a deal through collusion with Barclays, while at the same time preserving the stockholders’ ability to determine for themselves whether to accept the $19 per share Merger price. The plaintiffs analogize this limited relief to an injunction conditioned on the making of corrective disclosures, which similarly imposes a temporary transactional delay and then allows stockholders to decide for themselves whether to accept a deal.

For the reasons that follow, I grant the relief plaintiffs seek, although for a shorter time period that takes into account the transaction’s exposure to the market. The defendants are enjoined preliminarily from proceeding with the vote on the Merger *819 for a period of 20 days. Pending the vote on the Merger, the parties to the Merger Agreement are enjoined from enforcing the no-solicitation and match-right provisions in Section 6.5(b), (c) and (h), and the termination fee provisions relating to topping bids and changes of recommendation in Section 8.5(b). The injunction is conditioned on the plaintiffs posting a bond in the amount of $1.2 million.

I. FACTUAL BACKGROUND

The facts are drawn from the record developed in connection with the plaintiffs’ application for a preliminary injunction. The parties have submitted numerous documentary exhibits and the deposition testimony of seven fact witnesses. With their answering briefs, the defendants lobbed in four affidavits from witnesses who were deposed. Each of these lawyer-drafted submissions sought to replace the witnesses’ sworn deposition testimony with a revised and frequently contradictory version. Had the differing averments been elicited by defense counsel during deposition, as they readily could have been, then plaintiffs’ counsel could have tested the witnesses’ assertions through cross-examination. Except on routine or undisputed matters, I have discounted these “non-adversarial proffers” 1 and relied on the deposition testimony and contemporaneous documents. What follows are the facts as they are likely to be found after trial, based on the current record.

A. Moses Works Behind The Scenes To Put Del Monte In Play.

Investment banks generate large fees from doing deals. To facilitate transactional activity, investment bankers routinely pitch deals to parties they hope might be interested. Coverage officers for investment banks regularly visit past, present, and potential clients to suggest mergers, acquisitions, and other strategic alternatives. Barclays is no exception.

Barclays has a strong presence in the consumer food and pet product sectors where Del Monte operates. Peter J. Moses is the Barclays managing director with coverage responsibility for Del Monte. Barclays and Del Monte have enjoyed a close relationship. In 2009, Barclays acted as joint book-runner on Del Monte’s $450 million issuance of 7.5% senior subordinated notes and as joint dealer-manager and solicitation agent on Del Monte’s tender offer and consent solicitation for its 8 5/8% senior subordinated notes. During late 2009, Barclays advised Del Monte on and arranged financing for its unsuccessful acquisition of Waggin’ Train LLC. In January 2010, Barclays acted as co-lead arranger for Del Monte’s $1.2 billion senior secured credit facility. Barclays understood that it was one of Del Monte’s principal investment banks.

Del Monte’s stable businesses throw off large amounts of cash, a critical attribute for debt-fueled LBOs. In fiscal 2010, for *820 example, Del Monte generated $3.7 billion in net sales and $250 million in cash flow. According to the bankers deposed in this case, the debt markets in late 2009 were again receptive to leveraged acquisitions, having shaken off the cobwebs from the concussive impact of Lehman Brothers’ bankruptcy. Mergers and acquisitions activity in the canned food and pet products sectors had picked up. Investment bankers were busy pitching Del Monte on potential acquisitions and pitching potential acquirers on Del Monte.

Like many large banks, Barclays has strong relationships with various LBO shops. KKR is one of Barclays’ more important clients. Tarone Tr. 95. Over the past two years, KKR has paid Barclays over $66 million in fees. Barclays has worked with KKR on half a dozen projects in the consumer and retail space, including a large transaction where Barclays acted as both sell-side advisor and provided buy-side financing for KKR. Tarone Tr. 93-94.

On December 17, 2009, Moses and other Barclays bankers met with KKR to present various opportunities, including an acquisition of Del Monte. In early January 2010, Moses met with KKR again. KKR said it was ready “to take the next step” with Del Monte and planned to partner with Centerview on a bid. PX 16. Moses responded by outlining with prophetic clarity the process Del Monte would follow: a narrow, private solicitation of interest from a small group of approximately five sponsors with no strategic bidders. Moses made similar pitches during the same time period to other private equity firms, including Apollo Management.

B. Apollo’s Expression Of Interest And Del Monte’s Process

Before KKR could “take the next step,” Apollo sent Del Monte a written expression of interest in an acquisition at $14 to $15 per share. After receiving the letter, Del Monte reached out to Barclays. Moses believed Del Monte was also reaching out to other banks, including Goldman Sachs, a firm that ran an earlier process for the Company.

Moses told Del Monte that Barclays was well-positioned to advise Del Monte because Barclays “knew many of the entities that might be an interested buyer.” Ben. Tr. 59. Moses did not mention that he personally had been pitching Apollo, KKR, and other private equity firms on acquiring Del Monte. The Board did not learn of Moses’ efforts to stir up the initial LBO bid until discovery in this litigation.

Moses also did not mention that Bar-clays planned from the outset to seek a role in providing buy-side financing. Bar-clays’ internal “Project Hunt [Del Monte] Screening Committee Memo” dated January 25, 2010, stated bluntly that “Barclays will look to participate in the acquisition financing once the Company has reached a definitive agreement with a buyer.” PX 54. A March 2010 version of the memo reiterated Barclays’ intent. The Board did not learn that Barclays intended from the outset to have a buy-side role until discovery in this litigation.

Barclays immediately began advising Del Monte on responding to Apollo’s expression of interest and exploring strategic alternatives. Moses recommended that the Board pursue a targeted, non-public process that tracked precisely what Moses had previewed with KKR and the other private equity firms. There are sound and reasonable justifications for such an approach, including a desire to avoid market leaks that could disrupt company operations and spook employees. But a narrow, targeted process involving a few large private equity firms also furthered Barclays’ goal of providing buy-side financing. Private equity buyers are generally more *821 likely than strategic buyers to require financing, and Barclays was one of a limited group of institutions with sufficient resources to handle a transaction as large as the Del Monte LBO.

Barclays then identified the five LBO shops that would be invited to submit expressions of interest: KKR, Apollo, The Carlyle Group, CVC Partners, and the Blackstone Group. The Board adopted Barclays’ recommendation.

Despite efforts to keep the process quiet and private, word leaked out. Vestar and Campbell’s Soup contacted Barclays and asked to be included, which they were. Blackstone dropped out, and Del Monte entered into confidentiality agreements with the six participants. Each of the participants agreed not to discuss the confidential information they obtained from Del Monte or their bids with anyone, including each other. A critical provision stated:

In addition, you agree that, without the prior written consent of the Company, you and your Representatives will not disclose to any other person (other than your Representatives) the fact that you are considering a possible transaction with the Company, that this Agreement exists, that the Confidential Information has been made available to you, that discussions or negotiations are taking place concerning a possible transaction involving the Company or any of the terms, conditions, or other facts with respect thereto (including the status thereof).... Without limiting the generality of the foregoing, you further agree that you will not, directly or indirectly, share the Confidential Information with or enter into any agreement, arrangement or understanding, or any discussions which would reasonably be expected to lead to such an agreement, arrangement or understanding with any other person, including other potential bidders and equity or debt financing sources (other than your Representatives as permitted above) regarding a possible transaction involving the Company without the prior written consent of the Company and only upon such person executing a confidentiality agreement in favor of the Company with terms and conditions consistent with this Agreement.

PX 18 at 2 (the “No Teaming Provision”). By securing this language, the Board ensured that Del Monte would have the contractual right to control the competitive dynamics of the process and determine whether any bidders would be allowed to work together on a joint bid. The confidentiality agreement also contained a two-year standstill. Id. at 4.

The confidentiality agreements provided a collateral benefit to Barclays. Absent Company consent, the signatories could not discuss potential financing with any source other than Barclays. Id. at 2. As with the decision to engage in a targeted, non-public canvass of private equity buyers, there are sound and reasonable justifications for such a provision. At the same time, the limitation served Barclays’ interests in obtaining a piece of the buy-side financing. Because of the provision, Bar-clays would have the first crack at discussing financing with each bidder, its credit group would be familiar with the deal, and its bankers could more persuasively pitch for a piece of the action. See Tarone Tr. 129-31. The lead banker on Barclays’ financing team acknowledged that Barclays would express interest in providing financing when discussing capital structures with bidders and that this put Barclays in the catbird seat for the business. See Id. at 89-93.

After executing a confidentiality agreement, each potential bidder was provided *822 with access to non-public information and received presentations from Del Monte senior management. All potential bidders were directed to submit non-binding indications of interest by March 11, 2010. Five did; Campbell’s Soup did not. Carlyle proposed a transaction in a range of $15.50 to $17.00 per share and asked for permission to explore debt financing with Bank of America, JPMorgan, Deutsche Bank, and Credit Suisse. Apollo proposed a transaction in a range of $15.50 to $17.00 per share and asked for permission to explore financing with Bank of America, JPMorgan, Morgan Stanley, Deutsche Bank, Credit Suisse, UBS, and BMO Capital Markets. CVC proposed a transaction at $15.00 to $16.50 per share, expressed interest in taking on an equity partner, and proposed to raise financing through its internal debt financing team. KKR expressed interest in a transaction at $17 per share. KKR did not ask for permission to talk to any banks and stated only that their bid contemplated “newly raised debt in line with the guidance provided by Bar-clays.” PX 20 at 3. To a Barclays’ banker seeking a buy-side role, KKR’s letter would have been the most reassuring, particularly because KKR had worked with Barclays in a dual role before.

Vestar’s bid raised tactical issues. Ves-tar expressed interest in a transaction in a range of $17.00 to $17.50 per share, making it the high bidder. Everyone understood that Vestar would need to pair up with at least one other sponsor. Vestar had made clear from the outset, and confirmed in its expression of interest, that “[it] would expect to commit to half of the required equity in this transaction and would look to partner with another private equity firm to fill out the remaining portion.” PX 50 at 2. Vestar thus was not going to bid alone. Its advantage was expertise in the food business and its strength as an operator. James Ben, who led the Barclays M & A team, regarded Vestar as a valuable participant in the sale process and expected that the firm would be a value-promoting partner for another bidder, though more for its operational expertise than as a source of capital. Ben Tr. 93-94. Moses suggested that Vestar consider pairing up with Carlyle. Ben considered pairing Vestar with Apollo. CVC had expressed interest in a second sponsor and was another logical option. Internal KKR documents reflect concern about Vestar working with another firm.

During its regularly scheduled meeting on March 18, 2010, the Board considered the five indications of interest. The Board decided that the Company’s stand-alone growth prospects were sufficiently strong that it was not in the stockholders’ best interests to proceed further with the process. The directors also concluded that Barclays had pushed too far, too fast, and that Barclays had not been hired to actually sell the company. See Martin Tr. 23-24. Moses blamed Richard Wolford, Del Monte’s Chairman, President, and CEO. He believed Wolford turned against the LBO at the last minute, spoke privately with the directors, and allowed Moses to walk into a hostile meeting unaware. KKR thought that “Barclays didn’t do such a good job here w/ Wolford and the board.” PX 23. When Barclays later kicked off the LBO process again, Moses would do a better job setting the table.

C. KKR Continues To Pursue Del Monte.

The Board specifically instructed Bar-clays “to shut [the] process down and let buyers know the company is not for sale.” PX 57. Over the ensuing months, KKR reached out to Del Monte on at least two occasions. In April 2010, KKR representatives met with Wolford and David Meyers, Del Monte’s CFO. KKR said it wanted *823 to keep the lines of communication open about future opportunities. In May 2010, KKR approached Del Monte about jointly pursuing acquisitions. Del Monte declined, both because KKR’s capital was too expensive and because Del Monte had all the capital it needed. KKR also continued to meet with Barclays.

D. Barclays Pairs Up Vestar With KKR.

In September 2010, Moses sensed that the timing was right to put the Del Monte LBO back together. Moses had lunch with Brian Ratzan of Vestar. Moses suggested that it might be “an interesting time to make another approach to [Del Monte]” and that, if Vestar were interested, “the ideal partner would be KKR.” Ratzan Tr. 35. Moses said that it was an “opportune time” for approaching Del Monte because “[t]he company had missed its numbers for a couple of quarters [and] [t]he stock price was down.” Id. at 36. On September 14, Moses discussed the idea with KKR. After meeting with KKR, Moses called Ratzan. Moses then emailed his colleagues that Vestar “is going to partner with KKR on [Del Monte]. So team wi[ll] be kkr, vestar and hooper (een-terview). Obviously this is confidential.” PX 60.

At the time, both Vestar and KKR were bound by their confidentiality agreements with Del Monte. The No Teaming Provision prohibited Vestar and KKR from entering into any “agreement, arrangement or understanding, or any discussions which would reasonably be expected to lead to such an agreement, arrangement or understanding with any other person, including other potential bidders and equity or debt financing sources (other than your Representatives as permitted above) regarding a possible transaction involving the Company without the prior written consent of the Company....” Vestar and KKR did not have “prior written consent” from Del Monte. Nor did Barclays. In fact, Bar-clays was not authorized at that time to do anything on behalf of Del Monte. The Board had instructed Barclays “to shut [the] process down and let buyers know the company is not for sale.” PX 57.

By pairing Vestar with KKR, Barclays put together the two highest bidders from March 2010, thereby reducing the prospect of real competition in any renewed process. There were other logical pairings that would have promoted competition. Teaming up Vestar and KKR served Bar-clays’ interest in furthering a deal with an important client (KKR) that previously had used Barclays for buy-side financing. After Moses paired Vestar with KKR, Ves-tar never considered working with a different sponsor.

E. KKR Makes Its Bid.

On October 11, 2010, representatives of KKR asked to meet with Wolford. During the meeting, KKR delivered a written indication of interest from KKR and Center-view to acquire Del Monte for $17.50 in cash. The price represented a 28.7% premium over the closing price of Del Monte’s common stock on the previous trading day. While nominally higher than the $17 offered in March, it was a step back given intervening market developments. Del Monte and Barclays calculated that an equivalent bid would have been $18.32. See PX 72 (“I landed on $18.32/share as the equivalent offer relative to the $17 previously”).

The KKR letter did not mention Vestar, and Vestar representatives did not attend the meeting. In preparing for the meeting, KKR and Vestar agreed not to disclose Vestar’s participation because “it’s just another thing Rick will have to go back to his board and explain. Will be *824 easier to bring in Vestar once we have traction with the Company.” PX 24.

After the October 11, 2010, meeting, Barclays worked with KKR to conceal Vestar’s participation. For example, on October 31, Brown of KKR emailed his colleagues that Vestar would not attend a meeting with Del Monte because of the complications it would create. PX 26 (“delicate time for Board, don’t want to upset matters potentially w[ith] a group change at a critical juncture. Vestar ultimately ok w[ith] this”). Moses agreed that it was best to keep Vestar’s involvement hidden. See PX 62 (e-mail from Moses to Brown, dated Oct. 31, 2010, “agree at this point that we keep meeting to K[KR] and Centerview from your side.”).

F. The Board Adopts A Single-Bidder Strategy.

On October 13, 2010, the Board met to consider KKR’s indication of interest. The Board met again on October 25. Management discussed the Company’s long range plan and the challenges and risks associated with its execution. Management suggested that a transaction with KKR potentially represented a “risk-free alternative” to the long range plan. On the question of whether to sell, management faced conflicts of its own. Wolford planned to retire in 2012 and was being pressed by the Board for a succession plan. Wolford was resisting and had said he would rather sell the Company than remake his team. From an economic standpoint, Wolford would receive an additional $24 million if Del Monte was sold before his retirement. Del Monte CFO Meyers also planned to retire in 2012 and would receive an additional $5 million if the Company was sold before then. See Proxy Supp. at 6-11.

After deciding to pursue discussions with KKR, the Board considered whether to conduct a pre-signing market check. The Board concluded that none was needed. First, KKR’s indication of interest at $17.50 per share was at the high end of the indications of interest that the Company had received in March 2010, although lower on a relative basis after adjusting for intervening market trends. Second, the Board felt that no other potential bidders were lurking in the wings, because only Campbell’s Soup came forward when word of the private process leaked in early 2010. Third, no one other than KKR had communicated with Del Monte in the eight months since the Board instructed Bar-clays to tell bidders that Del Monte was not for sale. Fourth, the Board was concerned that a renewed process could have detrimental effects on employees, customers, and the stock price, particularly if the process did not result in a completed transaction. Finally, the Board considered that the previous high bid of $17.50 had been submitted by Vestar, a firm that needed to partner with a larger sponsor to make a bid. At the time, the Board did not know that Barclays had teamed Vestar with KKR.

The Board ultimately decided to adopt a single-bidder strategy of negotiating only with KKR. During the meeting, the Board formally authorized the Company to “reengage” Barclays as its financial advisor. After the meeting, the Chairman of the Strategic Committee, Terence Martin, met with Moses and Ben to negotiate Barclays’ new engagement letter. Martin “personally directed that Barclays was not to speak or act on Del Monte’s behalf until the terms of the engagement letter had been finalized.” Martin Aff. ¶22. The Bar-clays representatives did not tell Martin that Moses had been communicating with Vestar and KKR, put the two firms together, and helped spur the KKR bid. Bar- *825 clays then began advising Del Monte on the bid Moses engineered.

G. The Initial Negotiations With KKR.

Between October 26 and November 9, 2010, Barclays interacted with KKR. Bar-clays reported frequently to Del Monte management and the Strategic Committee, but Barclays was the principal point of contact for KKR.

On October 27, 2010, the Board asked Barclays to tell KKR that the $17.50 per share offer was insufficient, but that the Company was prepared to give KKR access to due diligence information to allow them to submit a higher offer. On November 4, KKR attended a meeting with Del Monte management. Barclays and KKR agreed that Vestar would not attend and to keep Vestar’s involvement secret from the Company

On November 8, 2010, news of a potential Del Monte LBO leaked when the London Evening Standard reported that KKR had offered to acquire the Company for $18.50 per share. Later in the day, KKR contacted the Board and raised its offer to $18.50 with a request for exclusivity. Ves-tar’s participation still went unmentioned.

On November 9, 2010, the Board met to discuss KKR’s proposal. The Board declined to grant formal exclusivity, but did not reach out to any other bidders. The Board also declined to approve a transaction at $18.50 per share. At the same time, the Board signaled its receptivity by authorizing KKR to begin discussing financing commitments with lenders. According to an internal KKR email, “Bar-clays guidance was we should read real significance into their authorizing full access with instructions to get us to a point of being firm/done based on the price we raised to.” PX 29.

H. Del Monte Finally Learns About Vestar’s Involvement And Barclays’ Buy-Side Desires.

With momentum building towards a deal, the time had come for the repeat M & A players to hit up the Board with two unsavory requests. First, during the week of November 8, 2010, KKR “formally approached Barclays Capital to request that the Company allow KKR/Centerview to include Vestar in the deal as an additional member of the sponsor group.” Proxy Supp. at 3. Note the artful phrasing. Bar-clays had paired Vestar with KKR in September, and they had been de facto partners since at least October. Yet Barclays had never been “formally approached,” and technically Vestar had never been “included in the deal as an additional member of the sponsor group.”

No one suggested that adding Vestar was necessary for KKR to proceed with its bid. There is no evidence that including Vestar firmed up a wavering deal. The Board was not told that Vestar in fact had been partnered with KKR since September, when Barclays put them together. The contemporaneous record does not reflect any consideration given to the ramifications of permitting KKR to team up with the firm who previously submitted the high bid and who could readily have teamed with Carlyle, Apollo, CVC, or another large buyout shop. The Board did not consider rejecting KKR’s request, enforcing the confidentiality agreement, and inviting Vestar to participate with a different sponsor to generate competition. The Board did not seek to trade permission for Vestar to pair with KKR for a price increase or other concession.

The second unsavory request was when Barclays finally asked Del Monte if it could provide buy-side financing, as Bar-clays had been planning to do since at least January 2010. Barclays had long *826 been signaling KKR about its desire to participate. On November 8, Moses asked KKR to give Barclays one third of the debt. KKR agreed. The next day Brown reported by email to the KKR investment committee that Barclays had “asked us to use JPM, BofA and Barclays themselves as the financing banks; we find that acceptable and will ask to add one more.” PX 29. Also on November 9, Barclays asked Del Monte management for permission to provide buy-side financing to KKR. They agreed. See PX 40. On November 12, Brown reported to his KKR colleagues that “Barclays has been cleared to be a financing bank.” JX 30.

At the time Barclays asked for and obtained Del Monte’s permission to provide buy-side financing, Del Monte and KKR had not yet agreed on price. Barclays’ buy-side participation was not used to extract a higher price. Nor was it necessary to finance the deal. No one thought that KKR needed Barclays, and other banks were already clamoring for their shares. Barclays simply wanted to double-dip. Through its buy-side role, Barclays will earn $21 to $24 million, as much and possibly more than the $23.5 million it will earn as the sell-side advisor.

On November 23, 2010, Del Monte executed a letter agreement that formally authorized Barclays to provide financing to KKR. In contrast to the Barclays witnesses, who reluctantly admitted when pressed that providing buy-side financing might create the appearance of a potential conflict, the November 23 letter acknowledged that Barclays’ relationship became adverse to Del Monte and that if push came to shove, Barclays would look out for itself. In the language of the letter, “[i]n the event that Barclays Capital is asked to provide acquisition financing to a buyer of the Company, the Company should expect Barclays Capital to seek to protect its interests as a lender, which may be contrary to the interests of the Company.” PX 35 at 1. Because of the conflict of interest, Barclays insisted in the letter agreement that Del Monte obtain a second fairness opinion. Id. (“Barclays Capital believes that it is essential, in addressing such conflicts of interest, for the Company to receive independent financial advice, including an additional fairness opinion, from an independent third party firm who is not involved in the acquisition financing....”). Not only did Del Monte fail to secure any benefits for itself or its stockholders as the price of Barclays’ buy-side participation, but Del Monte actually incurred an additional $3 million for a second financial ad-visor. Del Monte hired Perella Weinberg Partners LP to fulfill this role. Perella Weinberg’s fee is not contingent on closing. On the plus side, this helps make its work independent. On the minus side, Del Monte incurred a $3 million expense to help Barclays make another $24 million, and Del Monte will have to bear this expense even if the deal does not close.

I. Barclays Continues To Negotiate With KKR.

Between November 19 and 22, 2010, at the same time it was working with KKR to provide financing for the deal, Barclays ostensibly negotiated with KKR over the price. On November 22, Barclays reported that KKR was willing to consider paying $18.75 per share. Internally, Barclays already had evaluated a $19 price for KKR, and KKR had secured authority from its Investment Committee to bid up to $19 per share. The Board declined the $18.75 figure and instructed Barclays to go back to KKR.

On November 24, 2010, Barclays reported that KKR had made its best and final offer of $19 per share. Later in the day, the Board met to consider the offer. Bar- *827 clays and Perella Weinberg delivered their fairness opinions. The Board reviewed the provisions of the proposed Merger Agreement that had been negotiated between outside counsel to the Company and KKR. After discussion and an executive session, the Board unanimously approved the Merger Agreement.

J. The Terms Of The Merger Agreement

Section 6.5(a) of Merger Agreement provided for a 45-day post-signing go-shop period during which Del Monte had the right to “initiate, solicit and encourage any inquiry or the making of any proposal or offers that could constitute an Acquisition Proposal.” The Merger Agreement defines “Acquisition Proposal” broadly as

any bona fide inquiry, proposal or offer from any person or group of persons other than Parent or one of its subsidiaries for, in one transaction or a series of related transactions, (A) a merger, reorganization, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or similar transaction involving an acquisition of the Company (or any subsidiary or subsidiaries of the Company whose business constitutes 15% or more of the net revenues, net income or assets of the Company and its subsidiaries, taken as a whole) or (B) the acquisition in any manner, directly or indirectly, of over 15% of the equity securities or consolidated total assets of the Company and its subsidiaries, in each case other than the Merger.

MA § 6.5(d)(i). Once the go-shop period ended, Del Monte was bound by a customary no-solicitation clause that prohibited Del Monte, among other things, from “ini-tiatfing], soliciting], or knowingly eneour-age[ing] any inquiries or the making of any proposal or offer that constitutes or reasonably could be expected to lead to an Acquisition Proposal.” Id. § 6.5(b). The no-solicitation clause permits Del Monte to respond to a Superior Proposal, defined generally as an Acquisition Proposal (but with the references to 15% changed to 50%) that the Board determines is “more favorable to the Company’s stockholders from a financial point of view” than the Merger and “is reasonably likely to be consummated.” Id. § 6.5(d)(iii).

During the go-shop period, Del Monte was authorized to, among other things, waive or release any party from any preexisting standstill agreements with the Company, and Del Monte could do so “at its sole discretion.” Id. § 6.5(a). This is a salutary provision that eliminates any argument from the acquirer that it has an explicit or implicit contractual veto over the decision to grant a waiver or release. Exercising this authority, Del Monte released Carlyle, CVC, Apollo, and Campbell’s Soup from the standstill provisions in the confidentiality agreements they executed in February 2010.

Section 8.3(a) of the Merger Agreement permits Del Monte to terminate its deal with KKR to accept a Superior Proposal prior to the stockholder vote on the merger if

(i) the Company Board authorizes the Company, subject to complying with the terms of this Agreement, to enter into one or more Alternative Acquisition Agreements with respect to a Superior Proposal; (ii) immediately prior to or substantially concurrently with the termination of this Agreement the Company enters into one or more Alternative Acquisition Agreements with respect to a Superior Proposal; and (iii) the Company immediately prior to or substantially concurrently with such termination pays to Parent or its designees in imme *828 diately available funds any fees required to be paid pursuant to Section 8.5.

Id. § 8.3(a). Prior to exercising the termination right, Del Monte must have given KKR written notice describing the material terms and conditions of the Superior Proposal and negotiated with KKR in good faith for three business days to enable KKR to match the Superior Proposal. Id. § 6.5(h). The match right must be complied with for each change in the financial terms of or other material amendment to the Superior Proposal, except that after the first match the three business day period becomes two business days. Id.

If Del Monte terminates the Merger Agreement to enter into a transaction with an Excluded Party — defined generally as a person or group who made an Acquisition Proposal during the go-shop period — then Del Monte owes KKR a termination fee in the amount of $60 million, representing 1.13% of total deal value and 1.5% of equity value, or approximately $0,312 per share. Id. § 8.5(b). If Del Monte terminates the Merger Agreement to enter into a transaction with a party other than an Excluded Party, then the termination fee increases to $120 million, representing 2.26% of total deal value, 3.0% of the total equity value, and approximately $0,624 per share. Id.

The Board decided to let Barclays run the go-shop. In carrying out this assignment, Barclays had a direct financial conflict. In its role as sell-side financial advis- or, Barclays had earned $2.5 million for its fairness opinion (despite the conflict of interest giving rise to the need for a second banker) and would earn another $21 million if the deal closed. For its role in the buy-side financing for KKR, Barclays stood to earn another $21 to $24 million. As Ben acknowledged, Barclays would earn substantially more for executing the LBO with KKR than it would for any other strategic alternative. If another bidder emerged that did not need financing or who chose not to use Barclays, then Bar-clays would lose its buy-side financing fees. Martin testified that it “never occurred to us that [Barclays] wouldn’t do a good job.” Martin Tr. 64.

Other advisors were available. Perella Weinberg had rendered the second fairness opinion necessitated by Barclays’ conflict and could have handled the process. Goldman Sachs had a prior relationship with Del Monte and independently approached Del Monte about managing the go-shop. Upon learning of Goldman’s interest, Barclays told KKR that Goldman was trying to “scare up competition.” PX 32 (“Goldman has been pushing the company to help run their go-shop and scare up competition against us (!).... ”). Brown of KKR told Barclays that he would “manage it” directly with Goldman. Id. He solved the problem by letting Goldman participate in 5% of the syndication rights for the acquisition financing, which “squared things away there.” PX 33. After that, Goldman dropped its efforts to conduct the go shop.

During the go-shop period, Barclays contacted fifty-three parties, including thirty strategic buyers. Three requested and were provided with confidentiality agreements. Two parties from the early 2010 process re-engaged. No one expressed interest.

K. The Proxy Supplement

On January 12, 2011, Del Monte issued its definitive proxy statement on Schedule 14A. Many of the disclosures about the background of the transaction were false and misleading, in part because Barclays hid its behind-the-scenes activities from the Board. On February 4, after the completion of discovery in connection with the preliminary injunction application, Del *829 Monte issued the Proxy Supplement to moot the plaintiffs’ disclosure claims. The Proxy Supplement disclosed that the Company learned significant facts about Bar-clays’ role and interactions with KKR only as a result of this litigation.

Among other things, the Proxy Supplement disclosed the following:

• “Since the filing of the Definitive Proxy Statement, the Company has learned that as early as January 2010, representatives of Barclays Capital had indicated their intent to seek to participate as a financing source in connection with any future transaction pursued by the Company subject to the internal approval of Barclays Capital and subject to the approval of the Company if Barclays Capital were also acting as financial advisor to the Company.” Proxy Supp. at 2.

• “Since the filing of the Definitive Proxy Statement by the Company, the Company has learned that financing sources other than Barclays Capital could have provided sufficient financing for the transaction at $19.00 per share without the participation of Bar-clays Capital.” Id. at 4.

• “Since the filing of the Definitive Proxy Statement, the Company has learned that beginning in August 2010 and September 2010, after Barclays Capital’s engagement with the Company had formally concluded, Barclays Capital had routine business development discussions with, among others, KKR and Vestar, concerning potential strategic opportunities, including a potential acquisition of the Company. In the course of the discussions between Barclays Capital and Vestar, Barclays Capital and Vestar discussed that KKR/Centerview would be a good partner with Vestar and a good strategic match with Vestar if the potential for a transaction involving the Company arose. At the time of these discussions, Barclays Capital believed that Vestar and KKR/Centerview had prior discussions about potential opportunities in the consumer sector, including the possibility of an acquisition of the Company if the opportunity reemerged. The Company also has learned since the filing of the Definitive Proxy Statement that, subsequent to the routine business development discussions in August and September 2010 discussed above, KKR/Center-view and Vestar had discussions about working together on an indication of interest regarding a transaction with the Company.” Id. at 2-8.

• “Since the filing of the Definitive Proxy Statement, the Company has learned that during the period between October 11, 2010 and the week of November 8, 2010 there were discussions among the sponsors concerning the conversations between KKR/Centerview and the Company and about potentially adding Vestar as an acquisition partner at a later point in time in the event negotiations progressed with the Company.” Id. at 3.

The defendants released this information on the afternoon of Friday, February 4, 2011, apparently expecting that stockholders could digest it, determine how to vote, and either submit proxies or revocations or appear and vote at the special meeting on Tuesday, February 15. In light of the relief granted, I need not separately consider whether the timing and manner of dissemination were adequate under the circumstances.

II. LEGAL ANALYSIS

To obtain a preliminary injunction, the plaintiffs must demonstrate (i) a reasonable probability of success on the mer *830 its; (ii) that they will suffer irreparable injury if an injunction is not granted; and (iii) that the balance of the equities favors the issuance of an injunction. Revlon, Inc. v. MacAndrews & Forbes Hldgs., Co., 506 A.2d 173, 179 (Del.1986). The plaintiffs have met the first and second elements. After due consideration of the third element, I find that the circumstances call for a limited injunction along the lines the plaintiffs have requested.

A. The Probability of Success on the Merits

The first element of the familiar injunction test requires that the plaintiffs establish a reasonable probability of success on the merits. This showing “falls well short of that which would be required to secure final relief following tr