Corporate Law
1985
Moran v. Household International, Inc.
500 A.2d 1346 (Del. 1985)
Supreme Court of Delaware
Issue
Validity of the shareholder rights plan as an antitakeover device.
Facts
Household International adopted a shareholder rights plan before any specific takeover bid was pending. Shareholders challenged the plan as an improper restriction on shareholder voting and transfer rights.
Holding
The Delaware Supreme Court upheld the rights plan as a valid exercise of board authority subject to fiduciary review.
Reasoning
The court treated the poison pill as a defensive mechanism within the board's statutory authority, while emphasizing that its later use would remain subject to fiduciary scrutiny under Unocal. The board could respond to takeover threats, but not with unlimited discretion.
Why It Matters
Moran is the canonical poison-pill case and is central to law-and-economics debates over hostile takeovers, bargaining power, and managerial entrenchment.
Research Questions
- Which corporate actor gains authority or bears monitoring responsibility under the rule?
- How does the rule affect agency costs without unduly impairing informed business judgment?
Case Text and Citation
Cite the reported decision as 500 A.2d 1346 (Del. 1985). The linked copy is provided for reading access and may be hosted by a court, institutional repository, or secondary case archive.
Open case text: Justia