Quickturn Design Systems, Inc. v. Shapiro
Delaware Supreme Court
721 A.2d 1281 (1998)
- Written by Brett Stavin, JD
Facts
Mentor Graphics Corporation (Mentor) (plaintiff) sought to take over Quickturn Design Systems, Inc. (Quickturn) (defendant) by a tender offer and proxy contest. Quickturn’s board of directors determined that Mentor’s offer was inadequate, and the board therefore resolved to take defensive measures against the hostile takeover. To that end, Quickturn’s board amended the then-existing shareholder-rights plan to include a deferred-redemption provision (DRP). The effect of the DRP was to prevent any newly elected board from negotiating the possible sale of the company. Mentor filed suit in the Delaware Court of Chancery to enjoin implementation of the DRP. Mentor argued that the DRP should be declared invalid under Delaware law on the basis that it would improperly deprive newly elected board members of their authorities to manage the corporation and their associated fiduciary duties. The court of chancery ruled in Mentor’s favor, and Quickturn appealed.
Rule of Law
Issue
Holding and Reasoning (Holland, J.)
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