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Why did Unocal board decide to oppose a deal with Mesa?
Here, the Court of Chancery specifically found that the “directors’ decision [to oppose the Mesa tender offer] was made in the good faith belief that the Mesa tender offer is inadequate.” Given our standard of review under Levitt v. 2d 203, 207 (1965), we are satisfied that Unocal’s board has met its burden of proof.
What triggers Unocal?
The Unocal test requires that (1) the directors must have had reasonable grounds for believing that a danger to corporate policy and effectiveness existed and (2) their response must have been reasonable in relation to that threat, meaning that it was neither preclusive nor coercive and fell within a range of …
What is the US business Judgement rule?
Overview. The business judgment rule is invoked in lawsuits when a director of a corporation takes an action that affects the corporation, and a plaintiff sues, alleging that the director violated the duty of care to the corporation. Practically, the business judgment rule is a presumption in favor of the board.
What is the Revlon rule?
What is the Revlon Rule. The Revlon rule is the legal principle stating that a company’s board of directors shall make a reasonable effort to obtain the highest value for a company, when a hostile takeover is imminent.
What is the Unocal rule?
Unocal v. In Unocal, the Court held that a board of directors may only try to prevent a take-over where it can be shown that there was a threat to corporate policy and the defensive measure adopted was proportional and reasonable given the nature of the threat.
What is Unocal test?
Mesa Petroleum, 493 A. 2d 946 (Del. 1985), also known as the UNOCAL test. In this case, the Delaware Supreme Court established the enhanced scrutiny test, which is applied to a target board’s decision making process when a takeover is occurring, to determine if the business judgment rule will apply to their decisions.
What is the best judgment rule?
“The business judgment rule is a presumption that in making a business decision, the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.
What is the business judgment test?
The business judgment test is used to determine whether a director should be held liable for decisions that they make, that have undesirable results for the company.
Is Revlon a duty of care case?
The Revlon Rule, also known as the Revlon Doctrine or Revlon Duties, applies a fiduciary duty of care to corporate boards of directors when facing hostile takeovers and mergers.
What is the Unocal standard?
2d 946 (Del. 1985), also known as the UNOCAL test. In this case, the Delaware Supreme Court established the enhanced scrutiny test, which is applied to a target board’s decision making process when a takeover is occurring, to determine if the business judgment rule will apply to their decisions.
What is the intrinsic fairness test?
Under the intrinsic fairness test, the burden of proof is on the directors to show, subject to close scrutiny, that the transactions were objectively fair to Sinven. As is often the case, the party bearing the burden of proof on a given dispute lost.
What are the two fiduciary duties of a corporate board of directors?
The board of directors’ fiduciary duty includes the duty to exercise care in the management of corporate affairs, the duty of obedience, and the duty of loyalty to the corporation.
What are the two prongs of the Unocal test?
The Unocal test the court established in this case to determine whether directors may try to prevent a take-over is a two pronged test. The two prongs include: First, did the directors reasonably perceive a threat?
What was the court’s decision in Unocal v Mesa Petroleum?
In Unocal, the Court held that a board of directors may only try to prevent a take-over where it can be shown that there was a threat to corporate policy and the defensive measure adopted was proportional and reasonable given the nature of the threat.
What is the Unocal test for Board of directors?
This requirement has become known as the Unocal test for board of directors (as later modified in Unitrin, Inc. v. American General Corp., which required the tactics to be “coercive” or “preclusive” before the court would step in).
Why did Unocal make a self tender offer?
If a shareholder declined to tender, that shareholder risked being cashed-out for $54 in risky debt instruments instead of cash. In response to the Mesa tender offer, Unocal made a self-tender at $72 for all but the Mesa shares. The Unocal board attempted to launch a self-tender offer to combat an unsolicited tender offer by Mesa Petroleum (Mesa).