Blogs

POISON PILL UPHELD BY DELAWARE CHANCERY COURT

02.16.11

The Delaware Chancery Court upheld Airgas, Inc.’s poison pill defense in a ruling on Feb. 15, 2011 (PDF).  The Airgas poison pill had blocked a $5.9 billion hostile bid from Air Products & Chemicals Inc., which dropped the bid following the ruling.

As reported by The Wall Street Journal today, the Delaware court ruled that the “power to defeat an inadequate hostile tender offer ultimately lies with the board of directors.”  The court held that the poison pill was a reasonable response to the Air Products’ takeover attempt.  The key is that the court found the Airgas board of directors to be acting in good faith and complying with its fiduciary duties.

Bloomberg Businessweek reported today that the Air Products’ offer, which was made public on Feb. 4, 2010, was the eighth-longest-running U.S. hostile takeover bid since Bloomberg started tracking takeover offers.  Airgas subsequently announced a $300 million share buyback.

OUR TAKE:  This was an anticipated decision because poison pill cases are typically settled or dropped before the cases can be decided.  The Chancery Court has reinforced the viability of a poison pill as an appropriate response to a hostile bid that a board of directors in good faith believes is inadequate. 

The publications contained in this site do not constitute legal advice. Legal advice can only be given with knowledge of the client's specific facts. By putting these publications on our website we do not intend to create a lawyer-client relationship with the user. Materials may not reflect the most current legal developments, verdicts or settlements. This information should in no way be taken as an indication of future results.

Search Tips:

You may use the wildcard symbol (*) as a root expander.  A search for "anti*" will find not only "anti", but also "anti-trust", "antique", etc.

Entering two terms together in a search field will behave as though an "OR" is being used.  For example, entering "Antique Motorcars" as a Client Name search will find results with either word in the Client Name.

Operators

AND and OR may be used in a search.  Note: they must be capitalized, e.g., "Project AND Finance." 

The + and - sign operators may be used.  The + sign indicates that the term immediately following is required, while the - sign indicates to omit results that contain that term. E.g., "+real -estate" says results must have "real" but not "estate".

To perform an exact phrase search, surround your search phrase with quotation marks.  For example, "Project Finance".

Searches are not case sensitive.

back to top