## Facts

- British Printing & Communication Corp. PLC (BPCC) held a majority of Harcourt Brace Jovanovich, Inc.’s outstanding convertible debentures.
- BPCC’s chairman, Robert Maxwell, proposed that BPCC acquire Harcourt for $44 per share of Harcourt common stock.
- Harcourt’s management and its financial adviser, First Boston Corporation, met repeatedly with Maxwell’s group over roughly a week and reviewed Harcourt’s outlook and the proposed transaction.
- Harcourt’s board, relying on First Boston’s work, concluded the bid was inadequate in price and raised concerns about Maxwell’s commitment and financing.
- Harcourt adopted a defensive recapitalization plan that included a $40 per-share special cash dividend, increased employee stock ownership, and financing arrangements with First Boston that would give it shares and governance participation.
- BPCC claimed the recapitalization would entrench incumbent management, impede a change of control, and harm shareholders by foreclosing BPCC’s proposed transaction.
- BPCC sued alleging breaches of fiduciary duties of care and loyalty and moved for a preliminary injunction to stop consummation of the recapitalization.

## Issues

1. Whether Harcourt’s directors likely breached fiduciary duties by rejecting BPCC’s offer and approving a defensive recapitalization.
2. Whether BPCC satisfied the federal standard for preliminary injunctive relief, including likelihood of success (or serious questions plus hardship balance) and irreparable harm.

## Decision

- The court denied BPCC’s motion for a preliminary injunction.
- The court found BPCC did not make the required showing of likely success on its fiduciary-duty claims.
- The court also found BPCC failed to show irreparable harm sufficient to justify enjoining the recapitalization.

## Legal Principles

- Directors’ takeover-response decisions are generally protected when made through an informed, good-faith process with appropriate reliance on qualified financial advisers.
- In evaluating defensive measures, a court considers whether the board had reasonable grounds to perceive a threat to corporate policy or shareholder interests and whether the response is reasonable in relation to that threat.
- A preliminary injunction requires (1) likelihood of success on the merits and irreparable harm, or (2) sufficiently serious questions on the merits and a balance of hardships tipping decidedly toward the movant.
- Economic injuries that can be measured and compensated by money damages typically do not constitute irreparable harm.

## Conclusion

The court declined to halt Harcourt’s recapitalization because the record showed a deliberative, adviser-supported board process and a shareholder-benefiting rationale for the transaction, while BPCC did not establish either a probable fiduciary-duty violation or noncompensable harm warranting extraordinary injunctive relief.


British Printing & Commc’n Corp. PLC v. Harcourt Brace Jovanovich, Inc., 664 F. Supp. 1519 (S.D.N.Y. 1987)