Home -> Law Blog Directory -> Corporate Governance Blogs -> The Harvard Law School Corporate Governance Blog

OR PHONE (866) 635-1838 for Bankruptcy Help, (866) 635-6190 for Divorce,
(866) 635-2689 for Personal Injury or (866) 635-9402 for Criminal Defense

Find a Local Lawyer

Bankruptcy (866) 635-1838
Divorce (866) 635-6190
Personal Injury (866) 635-2689
Criminal Defense (866) 635-9402

Corporate Governance

: The Harvard Law School Corporate Governance Blog

Resetting the Trigger on the Poison Pill: Selectica?s Unanticipated Consequences

By Harvard Law School Program on Corporate Governance

ADVERTISEMENTS

Editor?s Note: Randall Thomas is a Professor of Law and Business at Vanderbilt University. This post relates to a recent paper by Professor Thomas and Paul Edelman, Professor of Law and Mathematics at Vanderbilt, which is available here. The paper pertains to the recent decision of the Delaware Chancery Court in Selectica, Inc. v. Versata Enterprises, Inc.; other posts discussing the decision are available here.

In a recent paper, Paul Edelman and I critically examine the Delaware Chancery Court?s recent decision in Selectica, Inc. v. Versata Enters., Inc., 2010 Del. Ch. LEXIS 39 (Del. Ch. March 1, 2010). In that case, applying the Unocal test to the use of the NOL pill against a potential acquirer, the Court rejected Versata?s claim that this new type of Rights Plan precluded a successful proxy contest for corporate control. The Court held that a Rights Plan must ?render a successful proxy contest a near impossibility or else utterly moot, which was given the specific facts at hand,? a standard that it felt that Versata did not meet and therefore it upheld the NOL pill. While NOL pills can only be used in a limited set of circumstances, typically by companies suffering severe financial distress, the Chancery Court?s language in its opinion could easily support extending this result to all Rights Plans, leading the standard trigger level on all Rights Plans to drop to 4.99 percent.

Click here to read the complete post...

Full post as published by The Harvard Law School Corporate Governance Blog on July 02, 2010 (boomark / email).