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Subject:  Re: Poison Pill Puzzle Date:  2/20/2002  1:46 PM
Author:  solasis Number:  172 of 297

this is a real world example that i was involved in. the actual company was private, and the two agitated board members were young and trying to wrest control or at a minimum create a change in control from the two older gentlemen (ceo and former ceo). they solicited a hostile bid for the company to stir things up, but couldn't get the fifth board member to go along. so they resigned themselves to pushing for another buyout party (white knight - my company) or resignation. however, for political reasons, and lacking foresight, they felt compelled to push for the hostile bid in the early votes. the ceo distorted his preference to kill off our bid, and bring the final vote to a choice of the poison pill vs. the hostile bid. the poison pill won. the agitators were outsmarted.

so the disgruntled board members wound up with a poison pill that temporarily impaired shareholder value, and then they promptly got fired, so they were worse off in the end than if they had just resigned in the first place (the company had a binding stockholder's agreement to pay out departing shareholders at net book value).

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