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Can a Management Team and a Board Just Say No?

 Robert Clark  
Product number:
HLS 13-19
17 pages
Product Type:
Role-Play Case Study
Educators / Non-Profits:
June 25, 2013


In this role-play case study, participants put themselves in the shoes of a law firm attorney who has been tasked with advising the board of Toys for Oldies (TFO), a publicly traded Delaware corporation listed on the NYSE, on how to deliberate about and react to unsolicited takeover proposals. A mid-cap company originally offered a seemingly generous price per share for TFO and attempted to make a friendly deal. Uninterested in being acquired, TFO’s CEO convinced the board to adopt a poison pill. The mid-cap company then launched a public tender offer for any and all shares of TFO, and the TFO CEO again convinced the board to resist the offer and avoid discussions with the bidder. Shortly after, a large-cap company made an unexpected additional bid for TFO, which the board also rejected. The two bidders then proceeded to raise their bids to surprisingly high levels. The participants must advise the TFO board on whether they are legally justified in continuing to resist these bids, and whether or not they should actively seek the best price possible from both bidders.

Included in this case study are excerpts from the 2011 Delaware decision Air Products and Chemicals, Inc. v. Airgas, Inc. (16 A.3d 48, Delaware Court of Chancery, 2011) as well as the 2009 Delaware decision Lyondell Chemical Company v. Ryan (970 A.2d 235 (Del. 2009)). Participants are asked to draw conclusions from these decisions to inform their advice to the TFO board.

This case study is part of a series that also includes HLS 13-18 An Unusual Executive Compensation Plan and HLS 13-20 Risk Management Duties and Liabilities at the Top.

Learning Objectives

This case study covers many important aspects of corporate law concerning takeovers, such as the need for a target board to make a good faith and reasonable investigation of bids, to identify judicially recognizable “threats” to corporate policy and effectiveness, and to assess the proportionality of takeover defenses, including assessments of whether such defenses are neither preclusive and coercive, and are also within the range of reasonableness. As participants put themselves in the shoes of an advising attorney, they must balance the desire of the company to remain autonomous against the goal of effectively shielding the board members from legal challenges by shareholders.

Subjects Covered

Mergers & Acquisitions, Corporate Governance, Shareholder Lawsuits


Geographic: United States

Industry: Gaming

Event Year Begin: 2013

Hard Copy

For hard copies, please contact the HLS Case Studies Program at hlscasestudies@law.harvard.edu or +1-617-496-1316. When ordering, please let us know how many copies of confidential materials that you will need.


To obtain accessible versions of our products for use by those with disabilities, please contact the HLS Case Studies Program at hlscasestudies@law.harvard.edu or +1-617-496-1316.

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