Unocal Corporation v. Mesa Petroleum Co.

Mesa Petroleum Co. (Mesa) (plaintiff), owning 13 percent of Unocal Corporation (Unocal) (defendant), made a two-tier tender offer for an additional 37 percent of Unocal stock at $54 per share, backed on the offer's second tier by highly subordinated 'junk bonds'; Unocal's board, with expert assistance, determined the offer was grossly inadequate on both ends (front-end value should have exceeded $60 per share, and the junk bonds were worth far less than $54) and responded with a selective self-tender offering $72 per share to all shareholders except Mesa, reasoning that including Mesa would effectively subsidize Mesa's own attempt to buy Unocal shares cheaply. Mesa sued challenging its exclusion, and the Delaware Court of Chancery granted a preliminary injunction against Unocal's exchange offer; Unocal appealed.