Nature of the Case
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Facts
Signal Corp. owned 50.5% of UOP stock (D). Seven of UOP's 13 directors, including the president, were also directors or employees of Signal. Two directors of Signal prepared a feasibility study for Signal in which they state that $24 would be a fair price for a cash-out merger for the shares. The study was given to all of the Signal directors but was never disclosed to D's non-Signal directors. Nor was it disclosed to the minority stockholders who owned the remaining 49.5%. The minority stockholders voted to approve the merger at $21 per share based upon a fairness opinion letter hurriedly prepared by an investment banking firm, and the misleading impression that there were real negotiations between the parent and the subsidiary over the merger price. Weinberger (P) is a minority stockholder in D.
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