Tate & Lyle PLC v. Staley Continental Corp.

Fed. Sec. L. Rep. (CCH) ¶ 93764 (1988)

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Tate & Lyle PLC v. Staley Continental Corp.

Delaware Court of Chancery
Fed. Sec. L. Rep. (CCH) ¶ 93764 (1988)

RW

Facts

Staley Continental Corporation, Inc. (Staley) (defendant) was in no imminent danger of a hostile takeover, but it was reasonable to anticipate a takeover attempt in the near future. To protect themselves against that prospect, Staley’s directors set up a trust fund that would compensate them should a takeover occur. The compensation plan applied equally to Staley’s managerial and nonmanagerial directors. Later, Tate & Lyle PLC (plaintiff) offered to buy out Staley’s shareholders. The offer was contingent on repeal of the directors’ compensation plan. Tate & Lyle also sued Staley’s directors for breaching their fiduciary duty to Staley’s shareholders. Tate & Lyle asked the Delaware Court of Chancery for a preliminary injunction that would block operation of the trust fund.

Rule of Law

Issue

Holding and Reasoning (Hartnett, J.)

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