Taditionally I show Other People's Money later in the year. However, since I can not be there it will be shown today.
Background and Things to look for in the movie (and yes it is definitely testable).
- This is an example of a hostile takeover. It was happening to break up the firm (it was worth more apart than it was together. This type of takeover was very common in the late 1980s (and to a lesser degree now when firms go private, sell off assets, and then go public again).
- Danny Devito's character is the stereotypical corporate raider. He is loved by shareholders but hated (and often bad mouthed) by managers.
- The takeover market is an external control mechanism. Note that it disciplines management.
- Greenmail is a targeted share repurchase plan that hurts the majority of shareholders. It is seen as a way of management keeping their jobs at the expense of shareholders.
- Stand-still agreements are agreements to not purchase any more shares until some future date.
- Poison pills are an example of shareholder right's plans.
- A 13D filing is required when you buy more than 5% of the firm.
- The Proxy contest that occurs is fairly typical (although outdated in nature). Both sides get to present their case (much like politicians in an election).
- How would a super majority amendment change this case?
- Why aren't more firms employee owned?
And finally in an attempt to squeeze even more fun out (and learning) out of the case, please download this mini-case and be able to answer the questions.