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Corporate Governance

: The Harvard Law School Corporate Governance Blog

Delaware Court Reaffirms the Poison Pill and Directors? Power to Block Inadequate Offers

By Harvard Law School Program on Corporate Governance

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Editor?s Note: Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. This post is based on a Wachtell Lipton firm memorandum, and relates to the decision of the Delaware Court of Chancery in the case of Air Products & Chemicals, Inc. v. Airgas, Inc., which is available here. Wachtell Lipton represented Airgas, Inc. in the matter.

Almost thirty years ago, our Firm announced there was a way ? the poison pill ? to level the playing field between corporate raiders and a board of directors acting to protect the interests of the corporation and its shareholders. Despite great skepticism about the pill in the legal and banking communities, the Delaware Supreme Court in 1985 agreed with us and affirmed that directors, in the exercise of their business judgment, could properly use the pill to protect the corporation from hostile takeover bids.

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Full post as published by The Harvard Law School Corporate Governance Blog on February 17, 2011 (boomark / email).