Corporations Keyed to Klein
Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc
Facts
Pantry Pride’s CEO approached Revlon’s CEO and offered a $40-42 per share price for Revlon, or $45 if it had to be a hostile takeover. The CEO’s had personal differences, and the court noted this as a potential motivation for Revlon to turn elsewhere. Revlon’s directors met and decided to adopt a poison pill plan and to repurchase five million of Revlon’s shares. Pantry Pride countered with a $47.50 price which pushed Revlon to repurchase ten million shares with senior subordinated notes. Pantry Pride continued to increase their bids, and Revlon decided to seek another buyer in Forstmann. Revlon offered $56.25 with the promise to increase the bidding further if another bidding topped that price. Instead, Revlon made an agreement to have Forstmann pay $57.25 per share subject to certain restrictions such as a $25 million cancellation fee for Forstmann and a no-shop provision. Plaintiffs, MacAndrews & Forbes Holdings, Inc., sought to enjoin the agreement because it was no t in the best interests of the shareholders. Defendants argued that they needed to also consider the best interests of the noteholders.
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