A recent Delaware Chancery Court decision reaffirming the vitality of poison pills as a defense against hostile takeovers is being hailed as a ringing endorsement of corporate boards’ discretion in takeover attempts—and also leaving shareholder activists with a bitter taste in their mouths.
The Chancery Court ruled on Feb. 15 that board members of Airgas, a $3.8 billion industrial gas company, were within their rights to prevent shareholders from accepting a hostile takeover bid from rival Air Products & Chemicals. The majority decision in Airgas v. Air Products & Chemicals, written by Chancellor William Chandler, plainly stated: “The power to defeat an inadequate hostile tender offer ultimately lies with the board of directors.”
