Court Upholds Poison Pill in Response to Activist Accumulations

The Delaware Court of Chancery on May 2 rejected a request by Third Point to enjoin Sotheby’s annual stockholder meeting, scheduled for May 6, because of a “poison pill” stockholder rights plan adopted by Sotheby’s board. Third Point LLC v. Ruprecht, et al.

Sotheby’s plan provided a 20% ownership trigger for stockholders who disclaimed intent to control the company, but a 10% ownership trigger for other stockholders (including activist investors like Third Point). Third Point asked for a waiver that would give it a 20% limit, but the Sotheby’s board refused. Third Point then asked the court to postpone the stockholder meeting, claiming that the board had breached its fiduciary duties in adopting the plan and refusing the waiver. In this opinion the court denied Third Point’s request.

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Topics:  Board of Directors, Breach of Duty, Poison Pill, Shareholder Rights, Sothebys, Stockholders' Meetings, Third Point

Published In: Business Torts Updates, Civil Procedure Updates, General Business Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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