From our private database of 14,100+ case briefs...
Paramount Communications, Inc. v. Time Incorporated
Delaware Supreme Court
571 A.2d 1140 (Del. 1989)
Time (defendant) began considering entering the field of entertainment and researched a wide range of companies as merger candidates, including Paramount (plaintiff) and Warner Brothers (Warner). Time and Warner eventually agreed to, and both boards approved, a stock-for-stock merger. However, before the merger was approved by Time stockholders, Paramount announced an all-cash offer for all of Time’s outstanding shares at $175 per share. Time’s board met to discuss the offer, but concluded that the offer posed a threat to Time’s future business and the retention of the “Time Culture.” At the same time, the Time board decided to change its merger with Warner into an all-cash and securities acquisition of Warner. Time then made a cash offer for 51 percent of Warner’s outstanding stock at $70 per share with the remainder to be purchased at a future date for a combination of cash and securities equaling $70 per share. A couple of weeks later, Paramount raised its offer for Time’s outstanding stock to $200 per share. The Time board again rejected the offer, maintaining that the Warner acquisition offered better long-term value for its stockholders and that it did not jeopardize Time’s corporate survival and “culture.” Time shareholders (plaintiffs) brought suit based on Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (1985), claiming that the Time-Warner agreement effectively put Time up for sale, thus triggering Revlon duties such as the requirement that the Time board seek to increase the corporation’s short-term value for its shareholders. In addition, Paramount brought suit based on Unocal Corporation v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985), claiming that Time’s belief that Paramount posed a threat to its future was not reasonable, that Time failed to fully investigate Paramount’s offer, and, under Unocal’s second prong, that Time’s response to any perceived threat was unreasonable. The Delaware Court of Chancery found in favor of the defendants on all claims. The plaintiffs appealed.
Rule of Law
Holding and Reasoning (Horsey, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 222,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,100 briefs, keyed to 189 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.