Resisting Hostile Takeovers in Pennsylvania- AlliedSignal v. AMP

The Pennsylvania Business Corporation Law (BCL) differs from the law of most other states regarding the rights and duties of a board of directors relating to a hostile takeover attempt. This article explores the application of the BCL to an unsolicited offer for the stock of AMP Inc (AMP), a Pennsylvania corporation, commenced by AlliedSignal Inc (ALD), a Delaware corporation. ALD and AMP each commenced litigation in the US District Court for the Eastern District of Pennsylvania. On October 8, District Court Judge James T. Giles ruled in AMP's favor on almost all issues. The AMP battle was a good test of Pennsylvania law in practice. AMP was well positioned to "just say no" to ALD and fight to remain independent. However, despite all the legal weapons in its arsenal and its early success in litigation, it ultimately followed the fairly conventional strategy of a company put in play by a hostile bid at a substantial premium.