9) Takeovers

Question 1

how a takeover often goes

Answer 1

1) try negotiating w board of directors

2) if fails, make tender offer to shareholders

Question 2

Unocal rule: situation

Answer 2

hostile transaction – so traditional deference under business judgment rule not used

only applies if there are outside directors (otherwise, duty of loyalty)

Question 3

Unlocal: rule

Answer 3

if board takes defensive measure in response to hostile takeover,

board must show

1) acted in good faith +, after reasonable investigation, concluded that danger existed to corporate policy + effectiveness
2) so took reasonable action in relation to threat posed (proportional)

Question 4

Revlon rule: situation

Answer 4

board is aware that break up of firm or change in control is imminent –> then, unocal rule no longer applies

Question 5

Revlon rule: rule

Answer 5

board’s sole responsibility is to maximize value for shareholders

Question 6

proxy contest: def

Answer 6

bidder trying to get elected to board of directors

Question 7

proxy contest: rule

Answer 7

use Unocal

–judge elements harshly if board takes any steps to disenfranchise shareholders

Question 8

state regulation

Answer 8

NOT CA

anti-takeover statutes – waiting periods, etc