a. What premium did Moore offer Wallace shareholders over the existing market price?
b. What percent of the shareholders voted to accept Moore's offer?
c. Why did the board say "No"?
d. Why did Moore need the board's approval if 73 percent of shareholders voted in favor of the offer?
e. Who was right-the Wallace board or its shareholders? (If students completed the Wallace Computer Services assignment, they could now report their findings.)
f. Does the law fairly balance the interests of shareholders, management, and bidders?
g. Can you make an argument that shark repellents help shareholders?
h. If these laws may actually harm shareholders, what is their purpose?
Under the terms of a poison pill, each shareholder had the right to purchase Wallace stock at half price, in the event that 20 percent of the company's stock was acquired in a hostile takeover. Moore offered to buy Wallace's stock for $56 a share, which was 27 percent over market price. However, the offer was contingent upon the Wallace board eliminating the poison pill. Goldman, Sachs, Wallace's investment banker, advised the company that the offer was inadequate. Moore increased its offer to $60 per share, but Goldman, Sachs again advised Wallace that the offer was too low. Both the board and Goldman believed that Wallace's recently adopted corporate strategy would cause the stock price to go up. It was true that the company's recent financial results had been better than expected. Nonetheless, more than 73 percent of Wallace shareholders offered their shares to Moore. When Wallace refused to remove the poison pill, Moore filed suit.