MGMT 520_week 7 case analysis-3 (VAN GORKOM Vs SMITH)
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Course
MGMT520
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Dervy University
Book
The Legal and Ethical Environment of Business
Select a case from the Case/Citation table below. This is an individual assignment. You must write and submit an individual paper. Your response should be well-rounded and analytical and should not just provide a conclusion or an opinion without explaining the reason for the choice. For full credit...
legal political and ethical dimensions of business
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Running Head: TITLE PAGE OF WEEK 7 CASE ANALYSIS 1
Title: (VAN GORKOM Vs SMITH)
Student Name:
MGMT 520: Legal Political and Ethical Dimensions of Business
Submitted To: Dr. Luis Reynoso
, CASE ANALYSIS (WEEK 7) 2
Parties:
VAN GORKOM Vs SMITH
Facts of the Case:
After the Board approved a merger agreement proposed by Trans Union's CEO, Alden
Smith and John Gosselin filed a class action lawsuit against the Defendant Company, Trans
Union, and its directors. The Marmon Corporation attempted to profit from a TransUnion
buyout. The company's CFO did not perform any research to assess the company's worth, and
TransUnion's CEO Van Gorkom proposed a price of $55 per share. Van Gorkom did not even
disclose the transaction to TransUnion's legal department (Butler, August 2006). The stock was
only worth about 60% of its later appraised value of $55 a share. He suggested the merger at a
board of directors meeting, and the directors gave him tentative approval. At the board meeting
where the vote was to be held, Van Gorkom failed to reveal a variety of details, including the
fact that the $55 price had no justification and that TransUnion management had raised
objections to the merger. Van Gorkom failed to send copies of the merger agreement to the board
of directors. The case was filed against the directors about the violation of their responsibilities
by few shareholders. (Kubasek, 2013).
Case Issue:
The main question on this case was whether the business judgement rule was protected
with the help of board vote in acquisition, and the second main question were about director.
Where after seeing the complete analysis and judgment from experts were the directors
incompetent to make a deal? (Butler, August 2006).
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