Penn Central Corp. created a wholly owned subsidiary called PCC Holdings.

The parent company, Penn Central, then sought to carry out a triangular merger by merging Colt Industries, Inc. (the target company) with PCC Holdings, thereby bypassing the right of Penn Central shareholders to vote on, or dissent from, the proposed merger. Some shareholders of Penn Central then sued Penn, claiming that the merger between PCC Holdings and Colt was a de facto merger between Penn Central and Colt.

CASE QUESTIONS

1. Should the court apply the de facto merger doctrine to the facts of this case? Why or why not?

2. Should the law permit triangular mergers?