Hanson Trust Plc v. Scm Corp.

774 F.2d 47 (2nd Cir. 1985)

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Nature of the Case

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Facts

On August 21, 1985, P publicly announced its intention to make a cash tender offer of $60 per share for any and all outstanding D shares. P filed the tender offer documents required by § 14(d)(1) of the Williams Act and regulations issued thereunder. On August 30, 1985, D announced a preliminary agreement with Merrill Lynch where they would acquire all D shares at $70 per share in a leveraged buy-out sponsored by Merrill. P then increased its tender offer from $60 to $72 cash per share. D than one-upped them and entered into a new leveraged buy-out agreement at $74 per share. If any investor or group other than Merrill acquired more than one-third of D's outstanding shares, Merrill would have the option to buy D's two most profitable businesses, pigments, and consumer foods, for $350 and $80 million respectively. P believed these prices to be below their market value. P terminated its cash tender offer. P then decided to make cash purchases of a substantial percentage of D stock in the open market or through privately negotiated transactions. If P could acquire slightly less than one-third of D's outstanding shares it would be able to block the $74 per share SCM-Merrill offer of a leveraged buy-out. P acquired 3.1 million shares or 25% of the stock. D applied to the judge for a restraining order barring P from acquiring more d stock for 24 hours. D argued that P's cash purchases immediately following its termination of its $72 per share tender offer amounted to a de facto continuation of P's tender offer, designed to avoid the strictures of § 14(d) of the Williams Act. The court held that P made 'a deliberate attempt to do an 'end run' around the requirements of the Williams Act,' but made no finding on whether P had decided to make the purchase of D before or after it dropped its tender offer. P appealed.