court: irrational v. motivated "acquiring person"

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Dear fellow Chancellors (and Chief Justices):
=20
Case #5 asks us to assume that "...no rational person would [attempt] to =
acquire over 15% of Commonwealth's stock" because of the harsh =
"triggering event" consequences associated with the preferred stock at =
issue. This is based on the premise that once the "triggering event" =
occurs the voting power of the "acquiring person's" shares would be so =
severely diminished as to foreclose any hope of success--to make such an =
attempt would be irrational. But at what point does one become =
irrational? Does a motivated buyer become irrational by choosing to =
mount a slightly more expensive attempt? =20
=20
Rough calculations using the numbers provided in the facts indicate, =
from a potential "acquiring person's" perspective, it might not be cost =
prohibitive to ignore the "triggering event" penalties and tender an =
offer with the same $200/share the other shareholders will be stampeding =
to trade (plus some additional cash)--they'd only have to buy another =
36% at the higher rate, and maybe less through a successful proxy =
agreement. Besides, all that cash being generated from the =
shareholders--approx. $85 Million once the "trigger" is pulled--will be =
inherited incrementally by the "acquiring person" with each share he =
buys. Just how preclusive is this??? It's hard to know what the =
per-share price would be once the "event" occurs, or how many shares =
would actually be purchased with the $85 Million, but our rough =
calculations indicate that the preferred stock provision might not be as =
impinging as the facts portray--is it? If it only serves to create a =
"speed bump" for a potential "acquiring person" then I say it's probably =
not violative of SH rights; however, if (as the facts proclaim) it truly =
forecloses (makes irrational) a decision to buy greater than 14.9% =
shares on the open market, it speaks more loudly to the abridgment of =
such rights.

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Dear fellow Chancellors (and Chief=20 Justices):

Case #5 asks us to assume that = "...no=20 rational person would [attempt] to acquire over 15% of Commonwealth's=20 stock" because of the harsh "triggering event" = consequences=20 associated with the preferred stock at issue. This is based on the = premise=20 that once the "triggering event" occurs the voting power of = the=20 "acquiring person's" shares would be so severely diminished as = to=20 foreclose any hope of success--to make such an attempt would be=20 irrational. But at = what point=20 does one become irrational? Does a motivated buyer become = irrational by=20 choosing to mount a slightly more expensive attempt? =20

Rough calculations using the numbers = provided in=20 the facts indicate, from a potential "acquiring person's" = perspective,=20 it might not be cost prohibitive to ignore the "triggering = event"=20 penalties and tender an offer with the same $200/share the other = shareholders=20 will be stampeding to trade (plus some additional cash)--they'd = only have=20 to buy another 36% at the higher rate, and maybe less through a = successful proxy=20 agreement. Besides, all that cash being generated from the=20 shareholders--approx. $85 Million once the "trigger" is = pulled--will=20 be inherited incrementally by the "acquiring person" with each = share=20 he buys. Just how preclusive is this??? It's hard to know = what the=20 per-share price would be once the "event" occurs, or how many = shares=20 would actually be purchased with the $85 Million, but our rough = calculations=20 indicate that the preferred stock provision might not be as impinging as = the=20 facts portray--is it? If it = only serves=20 to create a "speed bump" for a potential "acquiring = person"=20 then I say it's probably not violative of SH rights; however, if (as the = facts=20 proclaim) it truly forecloses (makes irrational) a decision to buy = greater than=20 14.9% shares on the open market, it speaks more loudly to the abridgment = of such=20 rights.