Word: courtly
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Dates: during 1980-1989
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...judge did grant Paramount's motion for a ten-day stay of the Time-Warner merger while Paramount appeals to the Delaware Supreme Court, which agreed to consider briefs throughout this week and hear the final arguments in the case ! on July 24. The appeal prevented Time from purchasing 100 million of Warner's nearly 200 million shares in a $70-per-share tender that had been scheduled to expire this week. Time would acquire the remaining Warner shares later for cash and securities...
...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...
...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 failed to meet the Unocal standard. But Allen...
Amid the arguments in the bitter struggle, court documents filed in Delaware gave a vivid picture of the two-year merger talks between Time and Warner. A Time brief showed that the two partners broke off negotiations in August 1988 over Time's insistence that Warner Chairman Steven Ross set a date for stepping down as co-chief executive of the merged company to make way for Time President N.J. Nicholas to hold the chief executive's job alone. Not until Ross agreed last January to step aside five years after the merger were the talks able to proceed...
Although Wall Streeters had generally come around to the expectation that Allen's decision would go in favor of Time, many did not agree with his philosophy when the ruling was announced. They suspected the Delaware court of siding with corporate management to preserve the state's lucrative role as a corporate haven. Most major U.S. companies, including more than half of the 1,671 firms listed on the New York Stock Exchange, are incorporated in Delaware. Said a Wall Street analyst: "What was really at stake was the kingdom of Delaware as the guardian for directors against shareholder rights...