Opinion ID: 1934995
Heading Depth: 1
Heading Rank: 8

Heading: Unitrin's Initial Responses

Text: On August 2, 1994, American General issued a press release announcing its Offer to Unitrin's Board to purchase all of Unitrin's stock for $50-3/8 per share. The press release also noted that the Board had rejected American General's Offer. After that public announcement, the trading volume and market price of Unitrin's stock increased. At its regularly scheduled meeting on August 3, the Unitrin Board discussed the effects of American General's press release. The Board noted that the market reaction to the announcement suggested that speculative traders or arbitrageurs were acquiring Unitrin stock. The Board determined that American General's public announcement constituted a hostile act designed to coerce the sale of Unitrin at an inadequate price. The Board unanimously approved the poison pill and the proposed advance notice bylaw that it had considered previously. Beginning on August 2 and continuing through August 12, 1994, Unitrin issued a series of press releases to inform its shareholders and the public market: first, that the Unitrin Board believed Unitrin's stock was worth more than the $50-3/8 American General offered; second, that the Board felt that the price of American General's Offer did not reflect Unitrin's long term business prospects as an independent company; third, that the true value of Unitrin [was] not reflected in the [then] current market price of its common stock, and that because of its strong financial position, Unitrin was well positioned to pursue strategic and financial opportunities; fourth, that the Board believed a merger with American General would have anticompetitive effects and might violate antitrust laws and various state regulatory statutes; and fifth, that the Board had adopted a shareholder rights plan (poison pill) to guard against undesirable takeover efforts.