Unocal Corp. v. Mesa Petroleum Co.
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Unocal v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985)[1] is a landmark decision of the Delaware Supreme Court on corporate defensive tactics against take-over bids.
Unocal Corp. v. Mesa Petroleum Co. | |
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Court | Supreme Court of Delaware |
Full case name | Unocal Corporation, a Delaware corporation v. Mesa Petroleum Co., a Delaware corporation, Mesa Asset Co., a Delaware corporation, Mesa Eastern, Inc., a Delaware corporation, and Mesa Partners II, a Texas partnership |
Decided | May 17, 1985 (oral decision) June 10, 1985 (written opinion) |
Citation(s) | 493 A.2d 946 (Del. 1985) |
Court membership | |
Judge(s) sitting | John J. McNeilly, Jr., Andrew G.T. Moore II, Justices, and Taylor, Judge |
Until the Unocal decision in 1985, the Delaware courts had applied the business judgment rule, when appropriate, to takeover defenses, mergers, and sales.[2]
In Unocal, the Court held that a board of directors may only try to prevent a take-over where it can be shown that there was a threat to corporate policy and the defensive measure adopted was proportional and reasonable given the nature of the threat.
This requirement has become known as the Unocal test for board of directors (as later modified in Unitrin, Inc. v. American General Corp., which required the tactics to be "coercive" or "preclusive" before the court would step in).