How Can a Hedge Fund Manager Dislodge a Poison Pill at a Public Company?

Third Point LLC (Third Point) recently filed a complaint in the Delaware Chancery Court against Sotheby’s and its board, challenging the defendants’ adoption and non-redemption of a poison pill.  The pill limits the amount of Sotheby’s common stock that Third Point can economically accumulate and undermines Third Point’s ability to wage a valid proxy contest and otherwise exercise the shareholder franchise.  This article describes the business context of Third Point’s “constructivist” campaign at Sotheby’s, the adoption of the pill by Sotheby’s and Third Point’s chief arguments in favor of rescinding the pill.

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