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AC Acquisitions Corp. v. Anderson, Clayton & Co.

Delaware Chancery Court
519 A.2d 103 (1986)

Written by Eric Miller, JD

Facts

Bear, Stearns & Co., Inc.; Gruss Petroleum Corp.; and Gruss Partners (collectively, BS/G) (plaintiffs) were shareholders of Anderson, Clayton & Co. (AC) (defendant). BS/G formed AC Acquisitions Corp. as a vehicle for a proposed acquisition of AC, which included a tender offer of $56 per share of AC’s stock, conditioned on BS/G’s acquisition of at least 51 percent of the stock. The AC board of directors wished to avoid the BS/G tender offer. AC made a self-tender offer at $60 per share. BS/G brought an action in the Delaware Chancery Court to enjoin AC’s self-tender offer, which BS/G claimed was economically coercive and a breach of the fiduciary duties of care and loyalty owed to the AC shareholders. It was undisputed in the record that effectuation of the self-tender would cause AC’s stock to decline—possibly to as low as $23 per share.

Rule of Law

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Holding and Reasoning (Allen, J.)

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