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Business Associations Keyed to Diamond, 6th Ed.
Unitrin, Inc. v. American General Corp.
Citation:
651 A.2d 1361 (1995)Facts
In July 1994, American General proposed to acquire Unitrin for $2.6 billion at $50-3/4 per share in cash, representing a 30% premium over the market price. Unitrin’s Board, consisting of two employee directors and five outside directors who collectively owned 23% of Unitrin’s stock (worth over $450 million), rejected the offer as financially inadequate and cited antitrust concerns. After American General publicly announced its offer on August 2, Unitrin’s Board adopted a poison pill and an advance notice bylaw provision. On August 11, the Board authorized a Repurchase Program to buy back up to 10 million of its 51.8 million outstanding shares. The Board stated this would provide liquidity to shareholders wanting short-term gains and enhance value for long-term investors. The directors announced they would not participate in the Repurchase Program, which would increase their collective ownership percentage from 23% to approximately 28%. Unitrin’s certificate of incorporation already contained a supermajority provision requiring 75% shareholder approval for any business combination with a more-than-15% stockholder unless approved by a majority of continuing directors.
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