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Unitrin, Inc. v. American General Corp.

Delaware Supreme Court
651 A.2d 1361 (1995)


Facts

American General Corp. (plaintiff) sought to acquire Unitrin, Inc. (defendant). Unitrin declined. American General made an all-cash tender offer to purchase all of the shares of Unitrin at a 30 percent premium. In response, Unitrin’s board approved a poison pill and authorized a share-repurchase program for up to 10 million shares of outstanding stock. Unitrin’s directors held about 23 percent of Unitrin’s stock. Institutional investors held 42 percent of Unitrin’s stock. American General challenged Unitrin’s board’s decision to implement the share-repurchase program in the Delaware Court of Chancery. The chancery court concluded that the repurchase program was a disproportionate response to American General’s tender offer because it was “unnecessary,” and the court preliminarily enjoined Unitrin from making more repurchases. Unitrin appealed to the Delaware Supreme Court.

Rule of Law

Issue

Holding and Reasoning (Holland, J.)

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