Back to top


Click here to go back


Posted by Admin Posted on Jan 18 2011

In his 1955 comic classic The Court Jester, Danny Kaye's enemy is trying to poison him.  His friends warn him not to drink from "the vessel with the pestle". Of course, someone breaks the vessel with the pestel, and now the pellet with the poison is in the flagon with the dragon.  Or is it?  You can watch the whole thing here:

The Delaware Courts are about to play out their own version of this classic bit.  Airproducts and Chemical's, Inc. launched a hostile takeover of Airgas, Inc. in February, 2010.  Airgas has a poison pill in place -- a stockholder rights plan that is designed to increase the cost of the acquisition to an unsustainable level.  The Airgas Board of Directors, which is controlled by the founder, is refusing to drop it.

Marty Lipton, a legendary corporate lawyer, invented the poison pill in 1982, when corporate raiders strode the land and management shivered at the first sound of their approach.  The Delaware court approved it three years later, buying Lipton's argument that it forced the buyer to negotiate with the Board, which represented all shareholders, instead of cutting individual deals with major shareholders.

Now the scenario is that the shareholders want to to sell, but the Board won't drop the poison pill so the sale can go through.  The shareholders are asking the Court to cancel the poison pill, arguing that it served its purpose and can't be used indefinitely to entrench management against the will of the shareholders.  Airgas claims it only takes 1/3 of the shareholders to call a special meeting to remove directors, so the shareholders haven't been harmed.

Marty Lipton, of course, is representing Airgas - and the poison pill he invented nearly thirty years ago.