Household International, Inc. (Household), was a diversified holding company with its principal subsidiaries engaged in financial services, transportation, and merchandising. The board of directors of Household adopted a forty-eight page "Rights Plan" by a fourteen-to-two vote. Basically, the plan provided that Household common stockholders were entitled to the issuance of one irrevocable right per common share if any party acquired 20 percent of Household's shares.

The right permitted Household shareholders to purchase $200 of the common stock of the tender offeror for $100. In essence, this forced any party interested in taking over Household to negotiate with Household's directors. Dyson-Kissner-Moran Corporation (DKM), which was interested in taking over Household, filed suit, alleging that this flip-over rights plan violated the business judgment rule. Who wins and why?