Delaware Court Upholds Poison Pill With 'Grandfather' Exemption for Existing Large Stockholder

03 September 2010 Publication
Authors: Gardner F. Davis Danielle R. Whitley

Delaware Corporate, Westlaw Journal/Thomson Reuters

Foley Partner Gardner Davis and Senior Counsel Danielle Whitley authored an article that appeared in Delaware Corporate, Westlaw Journal/Thomson Reuters on September 3, 2010 titled "Delaware Court Upholds Poison Pill With ‘Grandfather' Exemption for Existing Large Stockholder." The authors discuss the Delaware Chancery Court’s decision to uphold a shareholder rights plan, or "poison pill," employed by Barnes & Noble to stop a dissident shareholder’s rapid accumulation of stock. Focusing on the court’s approval of a "grandfather" exemption that allowed a major shareholder to exceed the pill’s 20 percent limit but capped the investor’s holding at that level, the authors note that Barnes & Noble’s board was entitled to take reasonable and non-preclusive action to ensure that an activist investor was unable to seek control block advantages at the expense of other investors.

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