Overview

In the decision of Yucaipa American Alliance Fund II v Riggio et al, a Delaware court upheld the adoption and use of a rights plan by the board of directors of Barnes & Noble as a good faith and reasonable response to a stockholder’s rapid open market accumulation of company stock.

Vice Chancellor Strine held that the familiar two-pronged analysis set forth in Unocal Corp. v. Mesa Petroleum was the appropriate standard of review and that the board was reasonable in adopting a 20% trigger rights plan while permitting the company’s chairman and his family to maintain an approximately 30% stake, and in refusing to raise the trigger threshold to enable two significant stockholders to jointly run a proxy contest.

In this briefing, Shearman & Sterling takes a closer look at the case.

To read more, click ‘View Briefing’.