Conglomerated Industries is a telecommunications company operating in a volatile industry. Due to desires to increase economies of scale, some telecom companies have been on acquisition sprees, buying up some of their competitors to increase their competitive advantage, infrastructure, and coverage. Conglomerated's board wants to maintain its current size, which they feel is ideal for the goals they have for the corporation. However, they soon learn that the company is the target of a hostile takeover by Teleco Inc., one of the largest of Conglomerated's competitors.

Teleco has offered to purchase all of Conglomerated's shares for 115% of their currently traded share price. Constance Glomerated, the founder and chair of the board of Conglomerated, is opposed to Teleco's proposed takeover, as she believes it would destroy the Conglomerated culture that she has built up over the years. Conglomerated's board of directors agrees with her and issues a new block of shares that would have the effect of replacing Teleco as Conglomerated's largest shareholder and making it virtually impossible for Teleco to complete its hostile takeover. Conglomerated issues the new shares to one of its existing shareholders, Teddy Perkins, who is friendly to Constance's ideas. Teddy has agreed not to sell his shares to Teleco and to allow Constance to remain at the helm of Conglomerated. With the addition of the new shares, Teddy becomes Conglomerated's single largest shareholder and holds the balance of power in the corporation. One of Conglomerated's other shareholders, Teddy's brother Benny Hope, is unhappy that the corporation has adopted this plan and commences a lawsuit to challenge its legitimacy.

Constance asks you, an experienced corporate lawyer, whether Benny's challenge to her plan is likely to be successful. Advise Constance of your assessment of the plan, including both its positives and negatives, whether you think it will be upheld by the courts, and the reasons for your conclusions.