Eisenberg v. Chicago Milwaukee Corp.
Delaware Court of Chancery
537 A.2d 1051 (1987)
- Written by Eric Miller, JD
Facts
Chicago Milwaukee Corp. (CMC) (defendant) preferred stock traded as high as $88.50 per share before a stock-market crash sent the price plummeting to less than $42 per share. Shortly after the crash, the directors of CMC commenced a self-tender offer of $55 per share. Although the terms of the preferred stock established a redemption value of $100 per share, CMC was not contractually obligated to redeem the shares at any time. The directors owned 41 percent of CMC’s common stock but very little of the preferred stock, on which they observed a policy of never paying dividends. In their offer to the preferred stockholders, the directors recited the purposes of acquiring the shares at an attractive price, delisting the shares from the stock exchange, and reducing their administrative and bookkeeping costs. However, there was no evidence that the directors had discussed delisting or cost reduction in their meetings about the tender offer. Michael Eisenberg (plaintiff), a preferred shareholder, initiated a class action in the Delaware Court of Chancery to preliminarily enjoin the offer.
Rule of Law
Issue
Holding and Reasoning (Jacobs, J.)
What to do next…
Here's why 778,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,200 briefs, keyed to 988 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.
