Wednesday, February 10, 2010
Last week Air Products filed a suit in Delaware Chancery Court challenging Airgas' "Just Say No" defense. This has the makings of being an important case if it gets as far as a ruling.
On the one side, we have Air Products launching a financed all-cash off for $60 (38% premium). On the other side we have a board that is apparently uninterested in the offer and has turned it down as undervaluing Airgas. The board has a pill in place and has not opted out of DGCL Sec. 203. The only other case we have challenging the "Just Say No" defense is Moore v Wallace (Fed Dist. Court Del). In Moore v Wallace the Federal District Court interpreted Delaware law as permitting such a defense. The Chancery Court has never actually ruled on the issue, however.
Of course, this isn't a perfect set of facts. It would be better if the Airgas had neither a pill nor 203 defenses in place. As it is, the board's decision to sit on its pill and not waive 203 will likely be subject to Unocal review. Nevertheless, this case may give the Chancery Court an opportunity to rule on the "Just Say No" defense. Appropriately enough, Wachtell Lipton is serving as Airgas' legal counsel.