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Corporations Keyed to Hazen
Unocal Corp. v. Mesa Petroleum Co.
Citation:493 A.2d 946 (Del. 1985)
On April 8, 1985, Mesa, the owner of 13% of Unocal stock, commenced a two-tier front loaded cash tender for 64 million shares of Unocal’s outstanding stock at a price of $54 per share. Unocal’s board consists of eight independent outside directors and six insiders. It met to consider the Mesa tender offer. Sachs on behalf of Goldman Sachs & Co. and Dillon Read & Co. opined that the minimum cash value that could be expected from a sale or orderly liquidation for 100% of Unocal’s stock was in excess of $60 per share. Saches also presented various defensive strategies available to the board. The directors then agreed to advise the board that it should reject Mesa’s tender offer as inadequate and that Unocal should pursue a self-tender to provide the stockholders with a fairly priced alternative to the Mesa proposal. The board then reconvened and unanimously adopted a resolution rejecting as grossly inadequate Mesa’s tender offer. Another focus of the board was the Mesa exclusion. Legal counsel advised that Mesa could only be excluded for what the directors reasonably believed to be a valid corporate purpose. On April 24, 1985, Unocal issued a supplement to the exchange offer describing the partial waiver of the Mesa purchase condition.
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