Delaware Law of Tender Offer

This paper will discuss the duties of directors and officers under the Delaware law of tender offer. The first part of the paper will describe the general problems facing directors considering a hostile tender offer, the history of Delaware law in this area, and its development up to the present. The second part of the paper will describe the business judgment rule, which normally guides the actions of the directors and protects them from shareholder lawsuits over management decisions. It will also show how this rule is affected by the duties of loyalty, care, and maximizing shareholder value. The third part of the paper will examine Paramount Communications, Inc. v. QVC Network, Inc. This will provide the main focus of the paper, since this is the most recent and comprehensive statement of the Delaware Supreme Court on the subject. The fourth part of the paper will look at the pending case of In re Santa Fe Pacific Shareholder Litigation, which presents the Delaware Supreme Court with some new problems in the area. In this part, the Santa Fe case will be compared with the QVC case in order to analyze possible outcomes.

No situation exhibits the conflict between the shareholders and the board of directors better than a proposed buyout or merger. Both groups have a lot at stake: the shareholders have placed their personal finances in the company in the expectancy that they will get a ret

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rs acted reasonably. This made their actions protected under the business judgment rule. QVC and Directors' Duties The most recent application of the Revlon rule was in Paramount Communications v. QVC Network. In this case, the Delaware Supreme Court affirmed an order of the Court of Chancery preliminarily enjoining defensive measures intended by the Paramount board to thwart an unsolicited tender offer by QVC Network. These measures constituted a strategic alliance between Paramount and Viacom, Inc. The offer by QVC, however, was more valuable than the proposed deal with Viacom. The court held that the sale of control triggered enhanced judicial scrutiny under both Revlon and Unocal. The case involved the search by the Paramount board for a suitable merging partner in the late 1980s. The Paramount board had initially considered Viacom as the suitable prospect, but negotiations stalled over the terms of who would run the surviving entity. The impasse was bridged and the Paramount board unanimously approved a merger agreement with Viacom which included three defensive measures designed to discourage any potential competing bid. First, Paramount was to be bound by a no shop agreement, preventing it from considering a
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Some common words found in the essay are:
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Approximate Word count = 7165
Approximate Pages = 29 (250 words per page)