Word: paramount
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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...
...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 to Allen, one would not expect them to be persuasive to the Supreme Court...
Wall Street had anticipated the Delaware ruling, sending Time's share price tumbling for several weeks on growing speculation that the company would stave off the Paramount bid. Time stock finished trading Friday at 145 1/4, down 6 1/4 points for the week but at the general level where analysts expect it to settle, at least briefly, if the Time-Warner deal goes through. Warner stock closed at 64 1/2, up 2 3/4, on the increased likelihood that Time would be able to carry out its tender offer. Paramount, which has been rumored to be a possible takeover target itself...
...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...
...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...