HANSON TRUST PLC V. SCM CORP.
774 F.2d 47 (2nd Cir. 1985)
NATURE OF THE CASE: Hanson (P) appealed from a preliminary injunction barring P from
acquiring shares of SCM (D) and exercising any voting rights with respect to 3.1 million
shares already owned.
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 then 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.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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