Terry V Penn Central Corp

668 F.2d 188 (1981)

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Nature of the Case

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Facts

Penn Central (D) is the successor to another company, which underwent reorganization under the bankruptcy laws. It had an advantage, for tax purposes, in a large loss carry-forward and in order to put that advantage to use, D embarked on a program of acquiring corporations whose profits could be sheltered. To this end, D created Holdings, a wholly owned subsidiary which acquired businesses desired by D. In 1981, D decided upon yet another acquisition: Colt. The management and directors of Colt and D agreed upon a merger of Colt into Holdings, compensated for by issuance of a second series of Penn Central preference stock to Colt shareholders. Terry (P) opposed the merger at the directors' meeting, and sought to preclude the consummation of the transaction. D has sought to acquire Colt Industries Inc.(Appellee), by merging Colt with PCC Holdings Inc, a wholly owned subsidiary of D. Ps, shareholders of Penn Central objected to the merger. In a diversity action before the U.S. District Court for the Eastern District of Pennsylvania, Ps sought injunctive and declaratory relief to enforce voting and dissenter's rights to which Ps asserted they were entitled. They further sought to enjoin Holdings from proceeding with the proposed merger, and in particular moved to enjoin a vote on the transaction, scheduled for October 29, 1981, by the shareholder of Central. The presiding judge denied Ps’ request. P filed an appeal in this Court and petitioned for a temporary injunction against the proposed shareholder vote until the appeal on the merits of the district court could be heard.