Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-12-29
Injunction Blocking Billion
Dollar Combination Is
Granted Stockholders.
SIX-M0NTHS' BATTLING
THROUGH COURTS ENDS
Dearth of Information, Ratio of
Exchange and Price Involved
Attacked in Decision.
BY the Associated Press.

BY the Associated Press.
YOUNGSTOWN, Ohio, December 20.
The proposed billion-dollar merger
of the Bethlehem Steel Corporation and
the youngstown Sheet e. Tube Co. was
denied by Common Pleas Judge David
G. Jenkins today when he granted mi
nority stockholders an injunction re-
straining the combination.
The decision was based on the merger
negotiations and the subsequent meet
ing on March IL of the Sheet 81 Tube
directors. Considering these proceed
ings Illegal the judge saw no reason for
going into the numerous controversial
points involved in the Sheet & Tube
stockholders meeting April 10, where
the merger was ratified.
Judge Jenkins handed down his deci-
sion six months from the inception of
one of the bitterest legal fights in cor
porate history, struggle of millions
that was carried out first with proxies
and then with lawsuits. Forces mar
shaled by Cyrus S. Eaton, Cleveland
financier, went into court with charges
of fraud after spectacular battle for
proxies.
Report Held Misleading.
The judge said that the Sheet & Tube
board of directors, after they had APP
proved the merger early this year, did
not give adequate information to their
stockholders on the merger when they
met last April and approved it.
Whether intentionally or not, the de-
cision said, the three accountants en-
ployed to make the audit of the merg-
ing companies prior to the merger, de-
livered misleading report to the stock
holders.
The divergence of the audits made on
the merger by both Ernst & Ernst, ac-
countants employed by the opponents,
and Price, Waterhouse, whom the rer-
ger negotiators hired, was due part
ly to the limitations placed upon the
latter by their clients and partly to
lack of uniform accounting practices,
the decision said.
Price, Waterhouse, the judge said,
were arbitrarily required to formulate
ratio of exchange of stock in the
merger deal practically exclusively en-
1929 earnings.
I'm fairness to the able experts who
undertook the work, they were so re-
stricted in the limitations imposed by
their clients that their recommended
tons could hardly be called their best
judgment. It was certainly not their
untrammelled judgment" the decision
said.
Industrial Advice Given.
Ernst g. Ernst. whom the court de-
scribed "as equally capable" arrived at
such a different ratio for an exchange
uf stock in the merger, that their con-
clusion if accepted would show the con-
sideration agreed upon to be shockingly
and grossly inadequate"
In connection with the divergence of
accounting testimony the judge laid
down some fundamental advice for in
dustrieS to follow,
The court deduces," the decision
said, that industries should
voluntarily with the co-opera-
ton of the accounting profession make
uniform as far as possible their account
ing practices for the guidance
and necessary knowledge of directors
and shareholders, as well as of investors
generally"
II am further of the opinion" the
court said, that directors, shareholders
and, incidentally, courts, should have
clear, explicit presentation Of the ac-
counting facts relating to corporation
in form and Language which in accord
ance with common sense will enable the
ordinary reader to determine
the actual state of the companys bust
ness. prospects and value"
The ratio of exchange of one share
of Sheet and Tube stock for a share
ana a third of Bethlehem was also
attacked. He said that his study of the
accounting phases of the consideration
''makes to my mind no definite eonclu-
CONTINUED on Page 4. Column 81