Business Associations/Corporations Class 20

1. Business Associations/Corporations Class 20 Professor Hill

2. Transactions Involving Controlling Shareholders: Weinberger • P has burden of showing reason to invoke more than BJ (remember Sinclair?) • Then, if D can show good process (here, approval by informed vote of majority of minority), P has burden to show transaction is unfair to minority • If D can’t show good process, must show fairness • Here, fair dealing and fair price

3. Vocabulary • Entrenchment • Proxy expenses for fight over policy vs. fight over personnel • “quick asset value” (net or gross) • Related definition • Treasury stock • Standstill agreement • Standstill agreement (another definition) • [Greenmail]

4. Vocabulary • Exchange offer • Selective or discriminatory self-tender • Two-tier, front loaded, (“bust-up”) • Second step (back-end) merger • “grossly inadequate” • Restrictive covenants

5. Vocabulary • Senior debt • Corporate raider • Junk bonds • Highly subordinated • ‘coercive’ • Pro rata

6. Takeover defenses • Unocal framework: IF • Reasonable grounds to believe that there is a threat to corporate policy and effectiveness AND • Response reasonable in relation to threat posed • THEN: D gets bj deference

7. T. Boone Pickens of Mesa, 1985 (?) and 2006

8. Mesa holding and aftermath • Discriminatory self-tender permitted where • threat to corporate policy and effectiveness and • Response is reasonable in relation to threat posed • SEC outlaws discriminatory self-tender, adopting “all-holders” rule • Poison pills are permitted, though, and they allow for discrimination between acquirer and other shareholders