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Revlon V. Mcandrews And Forbes

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Revlon v. McAndrews & Forbes: Less than a year later, the Delaware Supreme Court circumscribed directors’ freedom of action by holding in this case that, once a sale is in progress, the director’s duty switches from protection or maintenance of the corporate enterprise to obtaining ‘’the highest price for the benefit of the shareholders. In other words, once directors understand that the takeover will be successful, their duty is simply to obtain the best price for the shareholders.
The first precedents of the Delaware Supreme Court show that the standards were reluctant to the permissiveness in adopting defensive measures. Rather, the courts preferred the passivity of the board. However, 4 years later the standards changed when the Court relaxed the reins that had been tightened in Unocal and Revlon.
Paramount Inc. v. Time Inc.: The court gave more leeway to directors in deciding on defensive measures, even after it was inevitable that the target would be sold. The court held that directors of target could consider factors other than money values of the offers, including the amount of information available to shareholders, the conditions attached to the offers, and the timing. These factors might justify defensive measures. These defenses were called ‘’just say no defenses’’. They refer to the ability of directors to simply reject takeovers for the purpose of protecting the constituencies of the company.
Unitrin v. American General: The Supreme Court of Delaware expanded
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