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Business Associations Keyed to Hwang, 3rd Ed.
Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.
Citation:
506 A.2d 173 (1986)Facts
Ronald Perelman of Pantry Pride approached Revlon CEO Michel Bergerac in June 1985 about acquiring Revlon, but was rebuffed. Pantry Pride commenced hostile tender offers beginning at $45 per share in August 1985. Revlon’s board adopted a Rights Plan (poison pill) and conducted its own exchange offer for ten million shares using Notes with restrictive covenants. As Pantry Pride increased its bids to $50 and then $53 per share, Revlon authorized management to negotiate with third parties including Forstmann Little and Adler & Shaykin. The board ultimately approved Forstmann’s $57.25 offer, which included a lock-up option to purchase Revlon’s Vision Care and National Health Laboratories divisions for $525 million (substantially below their appraised value), a no-shop provision, and a $25 million cancellation fee. The board’s stated justifications included protecting noteholders whose securities had declined in value due to the impending waiver of debt covenants. Pantry Pride raised its bid to $56.25 and then $58, but the board favored Forstmann’s marginally higher offer with the protective provisions.
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