Hilton Hotels Corp. v. ITT Corp. (Hilton II)

Subsequent to previous litigation concerning the timing of an annual shareholder meeting, Hilton made a tender offer for the stock of ITT and announced plans for a proxy contest. ITT attempted to fend off takeover attempts by restructuring the corporation and forming a subsidiary that would allow ITT to change voting rules and thus thwart Hilton's attempt at a proxy fight.

Where an acquiror launches both a proxy fight and a tender offer, it "necessarily invokes both Unocal and Blasius. . ." "Unocal requires the Court to answer the following two questions: 1) Does ITT have reasonable grounds for believing a danger to corporate policy and effectiveness exists? 2) Is the response reasonable in relation to the threat? If it is a defensive measure touching on the issues of control, the court must examine whether the board purposefully disenfranchised its shareholders, an action that cannot be sustained without compelling justification." The Blasius rule states that "[E]ven if an action is normally permissible, and the board adopts it in good faith and with proper care, a board cannot undertake such action if the primary purpose is to disenfranchise shareholders in light of a proxy contest."

The Voting System