The Readers Digest Association (RDA) formulated a recapitalization plan that called for it to: (a) Purchase all
Question:
The Readers’ Digest Association (RDA) formulated a recapitalization plan that called for it to:
(a) Purchase all the shares of its Class B voting stock at a premium ratio of 1.24 to 1, with the newly issued common stock at one vote per share;
(b) Recapitalize each share of the Class A nonvoting stock into one share of the new voting common stock.
A group of Class A nonvoting shareholders opposed implementation of the recapitalization plan. RDA responded that it had established a Special Committee to evaluate the fairness of the transaction. Although the committee never tendered an opinion on whether the recapitalization plan was fair to the Class A shareholders in particular, it did conclude that the plan would benefit the corporation in general. Should the court issue a preliminary injunction against implementation of the recapitalization plan? Explain.
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Law for Business
ISBN: 978-1259722325
13th edition
Authors: A. James Barnes, Terry M. Dworkin, Eric L. Richards