P, a minority stockholder in Z Corp., voted against a proposed agreement between Z and X Corp., whereby the shareholders of Z, in consideration of payment of $100, were to grant an option for over eighteen months, to purchase all shares of Z. D, a principal stockholder and director in Z, organized Y Corp., in which D was principal stockholder and director. Y had an authorized capitalization including both common and redeemable preferred stock. The directors of Z and Y approved a merger agreement between the two corporations, wherein shareholders of Z received one share of redeemable preferred stock in Y for each of their shares of Z common. D gave all principal minority stockholders except P an option to purchase the same number of shares of common stock in Y as they had held in Z. The merger was approved by holders of two-thirds of the voting shares of Z, P only dissenting. Y and X then entered an option agreement similar to the original proposal. P seeks to set aside the merger agreement. Judgment for D affirmed, Matteson v. Ziebarth, 40 Wn. 2d 286, 242 P. 2d 1025 (1952).
Gordon L. Jaynes,
Corporations—Merger—Lawful Business Purpose,
28 Wash. L. Rev. & St. B.J.
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