Warner Communications v. Chris-Craft Industries, Inc.
Delaware Court of Chancery
583 A.2d 962 (1989)
- Written by Eric Miller, JD
Facts
Time Incorporated (plaintiff) acquired 50 percent of the common stock in Warner Communications Inc. (Warner) (plaintiff) as the first step in a planned merger. The plan next called for TW Sub Inc. (plaintiff) to merge into Warner, Warner to tender its remaining common stock to Time, and Warner preferred stock to convert into Time preferred stock. The certificate of designation that created Warner’s preferred stock gave the preferred stockholders the right to vote as a class on matters that would alter or change their rights. A similar provision gave the preferred stockholders the right to a class vote on any charter amendment that would adversely affect their rights. Holders of Warner preferred stock, including Chris-Craft Industries, Inc., and its subsidiary, BHC, Inc. (the preferred stockholders) (defendants), believed that these provisions entitled them to a class vote—as opposed to a vote of all shareholders—on the merger, though the certificate did not specifically enumerate such a right. Time, Warner, and TW Sub sought a determination that the preferred stockholders did not have the right to a class vote on the merger. Time, Warner, and TW Sub moved for judgment on the pleadings in the Delaware Court of Chancery.
Rule of Law
Issue
Holding and Reasoning (Allen, J.)
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