So Chancellor Chandler, in deciding Airgas, preserved the board’s power to decide when to sell the company. If a company’s shareholders don’t like it, they need to replace the board. If shareholders generally don’t like it they need to change the Delaware statute.
In upholding the board’s power, and confirming what most astute observers knew the law likely was, despite very strong facts the other way (no “coercion” or other obvious reason why the pill was needed), the court preserved the stability of Delaware law. Hard facts don’t have to make bad law. Although the Air Products bid was $70, the shares had been trading around $63. They fell from $63.73 to $61 after the decision, suggesting clarification of a small residual amount of uncertainty.
The decision illustrates one reason why Subramanian, et al, were wrong to suggest the Delaware anti-takeover statute is preempted by the Williams Act. If the statute, why not the pill — and other aspects of Delaware law that block takeovers? Here’s my response along these lines to the Subramanian et al argument.
Of course Congress theoretically could pass a law that explicitly preempts poison pills. Dodd-Frank’s intrusion into corporate governance makes this plausible. But such additional federal interference would not be wise.