## Facts

- WLR Foods, Inc., a Virginia poultry producer, was the target of a hostile takeover attempt by Tyson Foods, Inc., an out-of-state poultry producer.
- After WLR’s board declined to pursue merger discussions, Tyson commenced a tender offer for all outstanding WLR shares at $30 per share.
- WLR responded with defensive measures authorized by Virginia law, including invoking the Control Share Acquisitions Act and the Affiliated Transactions Act and adopting a shareholder rights plan under Virginia’s discriminatory-rights (“poison pill”) statute.
- WLR sought declaratory relief that its defensive actions and the challenged Virginia statutes were valid and constitutional.
- Tyson counterclaimed that four Virginia statutes (control-share, affiliated-transactions, discriminatory-rights, and business-judgment) were preempted by the federal Williams Act and unconstitutional under the dormant Commerce Clause, and it also alleged state-law fiduciary breaches by WLR’s directors.
- The opinion addressed Tyson’s motion for a preliminary injunction to enjoin enforcement of the four Virginia statutes to facilitate Tyson’s tender offer.

## Issues

1. Whether Tyson showed a likelihood of success that the challenged Virginia anti-takeover statutes are preempted by the Williams Act.
2. Whether Tyson showed a likelihood of success that the challenged statutes violate the dormant Commerce Clause by discriminating against or unduly burdening interstate commerce.
3. Whether Tyson satisfied the requirements for preliminary injunctive relief (likelihood of success, irreparable harm, balance of equities, and public interest) to block enforcement of duly enacted state corporate statutes.

## Decision

- The court denied Tyson’s motion for a preliminary injunction.
- Tyson failed to show a clear likelihood of success on its Williams Act preemption claim because the Virginia statutes were viewed as state corporate-governance measures that did not bar tender offers or impede the federal disclosure-and-procedure scheme.
- Tyson failed to show a clear likelihood of success on its dormant Commerce Clause claim because the statutes applied evenhandedly to qualifying Virginia corporations and acquirors and any incidental burden on interstate commerce was not clearly excessive relative to Virginia’s asserted interests.
- Because Tyson did not satisfy the merits element, the remaining preliminary-injunction factors did not justify extraordinary relief; the court favored maintaining the status quo and respecting presumptively constitutional state statutes.

## Legal Principles

- The Williams Act principally regulates disclosure and procedures for tender offers; state laws governing internal corporate affairs are not preempted absent a direct conflict with the Act’s provisions or purposes.
- State anti-takeover statutes that may affect the economic attractiveness or success of a bid are not preempted solely because they deter or delay hostile acquisitions; the relevant question is whether they interfere with federally required information and shareholder opportunity to decide.
- Dormant Commerce Clause scrutiny turns first on discrimination; facially neutral corporate statutes applicable without regard to bidder residency are generally evaluated under Pike balancing.
- Under Pike v. Bruce Church, incidental burdens on interstate commerce are permissible unless clearly excessive in relation to legitimate local benefits, including regulation of corporate internal affairs and shareholder protections.
- In preliminary-injunction requests challenging state statutes, the movant bears the burden to show a clear likelihood of success on the constitutional claims; failing that showing typically defeats preliminary relief.

## Conclusion

The district court refused to preliminarily block Virginia’s control-share, affiliated-transactions, discriminatory-rights, and business-judgment statutes, holding Tyson had not shown a likely Williams Act preemption or dormant Commerce Clause violation and therefore was not entitled to injunctive relief during its hostile tender offer for WLR.


WLR Foods, Inc. v. Tyson Foods, Inc., 861 F. Supp. 1277 (W.D. Va. 1994)