Unocal Doctrine (M&A Glossary)

Summary

Doctrine established in two Delaware cases (Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985); Unitrin, Inc. v. American General Corp. (In re Unitrin Shareholders Litigation), 651 A.2d 1361 (Del. 1995)) that establishes the limits under Delaware fiduciary duty principles of board-adopted takeover defenses. Under these two cases, the board bears the initial burden of showing that: (1) there were reasonable grounds for believing that a danger to corporate policy and effectiveness existed and (2) the defensive measure was reasonable in relation to that threat posed. However the measure chosen cannot be “coercive or preclusive.”