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Business Organizations Keyed to Bauman
Unocal Corp. v. Mesa Petroleum Co.
Citation:
493 A.2d 946 (Del. 1985).Facts
On April 8, 1985, Mesa (13% stockholder in Unocal) commenced a two-tiered tender offer to acquire more Unocal’s stock. Mesa’s offer consisted of a “front loaded” cash tender offer of $54 per share for 64 million shares (37%), and a “back-end” exchange of securities for the remaining publicly held shares (49%). Mesa had a national reputation at that time of being a “greenmailer.”
On April 13, Unocal’s board of directors met to consider Mesa’s offer. Several financial advisors and lawyers gave presentations regarding the offer and Unocal’s obligations. Unocal’s advisors believed that Mesa’s proposal was inadequate and outlined the possibility of a self-tender to defend against Mesa’s offer. The advisors estimated a reasonable range between $70-$75 per share. Thereafter, eight outside directors met separately with financial advisors and unanimously agreed to advise the board to reject Mesa’s tender offer.
The board met again on April 15 and agreed to a $72 per share selective stock repurchase plan, at the exclusion of Mesa, further resolving that if Mesa acquired 64 million shares Unocal would purchase the remaining 49% outstanding for an exchange of debt securities valued at $72 per share.
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