Word: allen
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Dates: during 1980-1989
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...ruling Allen affirmed the right of directors to manage a company's strategy. Among other arguments, Paramount had claimed that Time's directors breached their responsibility to company shareholders by converting the Time- Warner deal from the originally proposed stock swap, which required shareholder approval, into a two-stage leveraged takeover, which needed no such vote. The change gave Time shareholders no opportunity to choose between the Warner merger and Paramount's cash. But Allen found that the board's moves were consistent with Time's long-term plan to merge with Warner. He wrote, "The corporation law does...
...Delaware Supreme Court will have the final say in the matter, but a number of legal experts said they doubted that Allen's ruling would be overturned. The Supreme Court, they noted, has generally upheld Delaware's "business judgment rule," and has been even more forceful than the Chancery Court in giving corporate directors broad freedom to set long-range policy for their companies. Stanford University law professor Ronald Gilson disagrees with the ruling because he feels shareholders should have more rights in takeover battles, but he doubts the decision will be overturned: "If the Paramount arguments were not persuasive...
...reaching an almost unequivocal decision in the complex case, Allen dismissed a key Paramount claim, that Time's directors had put the company up for sale in March when they originally agreed to acquire Warner. If that had been found to be true, Time would have been obligated under Delaware law to seek the maximum immediate return to shareholders by auctioning the company to the highest bidder. Paramount's argument that Time's directors were selling the company to Warner rested partly on the fact that the exchange ratio of the proposed stock swap would have given Warner stockholders...
Time disagreed on the ground that Warner shareholders would not be voting as a controlling group in the corporation. Allen concurred: "I am entirely persuaded of the soundness of the view that it is irrelevant for purposes of such determination that 62% of Time-Warner stock would have been held by former Warner shareholders." In fact, he added, "neither corporation could be said to be acquiring the other. Control of both remained in a large, fluid, changeable and changing market...
...another major point, Allen rejected Paramount's claim that Time acted improperly in revamping its Warner deal after the Paramount offer was made. The precedent in judging such tactics is a 1985 Delaware case involving an effort by the California oil company Unocal to escape a raid by takeover artist T. Boone Pickens. In that case, the court decided that companies may take defensive moves only if they are "reasonable," as Unocal's were deemed to be. Paramount argued that Time's decision to launch the tender offer for Warner was excessive in proportion to the takeover threat and thus...