## Facts

- BNS, Inc., a Delaware corporation formed to acquire Koppers Company, Inc., commenced a hostile tender offer for all outstanding Koppers shares.
- During the bid, Delaware enacted DGCL § 203, restricting certain “business combinations” with an “interested stockholder” (generally a 15% holder) for three years after crossing the threshold unless specified exceptions are met (including prior board approval, 85% ownership, or later approval by the board and 66 2/3% of disinterested shares).
- Koppers had adopted a stock purchase rights plan (a poison pill) that would dilute a hostile acquirer upon crossing a specified ownership trigger unless the board redeemed the rights.
- BNS alleged § 203 substantially impeded its ability to complete a post-acquisition business combination and asserted Koppers’s board breached fiduciary duties by refusing to redeem the rights plan.
- BNS sued Koppers, its directors, and Delaware officials in their official capacities, seeking declaratory and injunctive relief, and moved for a preliminary injunction to bar enforcement of § 203 and to compel redemption/disablement of the poison pill.

## Issues

1. Whether BNS showed a likelihood of success that DGCL § 203 is preempted by the Williams Act under the Supremacy Clause.
2. Whether BNS showed a likelihood of success that § 203 violates the Commerce Clause by impermissibly burdening interstate commerce.
3. Whether BNS showed a likelihood of success that Koppers’s board breached fiduciary duties by maintaining the poison pill, and whether irreparable harm warranted an order compelling redemption.
4. Whether BNS satisfied the requirements for preliminary injunctive relief (likelihood of success, irreparable harm, balance of hardships, and public interest).

## Decision

- The court denied BNS’s motion for a preliminary injunction.
- The court held BNS did not demonstrate a reasonable probability that § 203 was preempted by the Williams Act because the statute regulated post-acquisition business combinations and did not directly conflict with federal tender-offer requirements.
- The court held BNS did not demonstrate a reasonable probability that § 203 violated the Commerce Clause because the statute applied evenhandedly to Delaware corporations and its burdens were not clearly excessive relative to Delaware’s interests.
- The court declined to compel redemption of Koppers’s poison pill, concluding BNS did not show a sufficient probability of success on fiduciary-duty claims or irreparable harm justifying mandatory injunctive relief.

## Legal Principles

- Preliminary injunctive relief requires (1) likelihood of success on the merits and (2) irreparable harm; failure on these grounds warrants denial without decisive reliance on the remaining factors.
- A state takeover-related statute is less likely to be Williams Act–preempted where it does not regulate tender-offer disclosures/timing and can be complied with alongside federal requirements, and where it does not materially frustrate federal objectives.
- Under Commerce Clause balancing, a nondiscriminatory statute regulating the internal affairs of domestic corporations will generally be upheld unless the burden on interstate commerce is clearly excessive in relation to legitimate local interests.
- A board’s defensive measures, including a poison pill, will not be enjoined at the preliminary stage absent a strong showing of fiduciary breach and non-speculative, non-compensable harm.

## Conclusion

The court refused preliminary relief against DGCL § 203 and Koppers’s poison pill because BNS did not show a sufficient likelihood of success on preemption, Commerce Clause, or fiduciary-duty theories, and did not establish irreparable harm warranting the extraordinary remedy sought.


BNS, Inc. v. Koppers Co., 683 F. Supp. 458 (D. Del. 1988)