Source: https://case-law.vlex.com/vid/665-f-2d-10-594817998
Timestamp: 2020-07-07 19:15:38
Document Index: 754388309

Matched Legal Cases: ['§ 7', '§ 18', '§ 14', '§ 78', '§ 7', '§ 7']

665 F.2d 10 (2nd Cir. 1981), 498, Grumman Corp. v. LTV Corp. - Federal Cases - Case Law - VLEX 594817998
665 F.2d 10 (2nd Cir. 1981), 498, Grumman Corp. v. LTV Corp.
Docket Nº: 498, Docket 81-7742.
Citation: 665 F.2d 10
Party Name: GRUMMAN CORPORATION, Plaintiff-Appellee, v. The LTV CORPORATION, CKH Corporation, Jones & Laughlin Industries, Inc. and Vought Corporation, Defendants-Appellants.
Case Date: November 13, 1981
665 F.2d 10 (2nd Cir. 1981)
GRUMMAN CORPORATION, Plaintiff-Appellee,
The LTV CORPORATION, CKH Corporation, Jones & Laughlin
Industries, Inc. and Vought Corporation,
No. 498, Docket 81-7742.
Henry L. King, New York City (Bartlett H. McGuire, Arthur F. Golden, Paul R. Koepff, Andrew C. Jacobs, William L. Rosoff, David W. Ferguson, and Davis Polk & Wardwell, New York City, on the brief), for defendants-appellants.
Raymond L. Falls, Jr., New York City (David H. Hyde, Immanuel Kohn, William T. Lifland, Dudley B. Tenney, and Cahill Gordon & Reindel, New York City, on the brief), for plaintiff-appellee.
Before MOORE and NEWMAN, Circuit Judges, and TENNEY, [*] District Judge.
This is an appeal from the granting of a preliminary injunction that prevents the LTV Corporation from proceeding with a
tender offer to acquire, in stages, all of the shares of Grumman Corporation. The District Court for the Eastern District of New York (Jacob Mishler, Judge) issued the injunction after finding that Grumman had proved a likelihood of success on its claims that the proposed acquisition would violate § 7 of the Clayton Act, 15 U.S.C. § 18 (1976), and that LTV's Offer to Purchase violates the Williams Act, §§ 14(d) and 14(e) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. §§ 78n(d) and 78n(e) (1976). Grumman Corp. v. LTV Corp., --- F.Supp. ---- (E.D.N.Y.1981). We agree that the preliminary injunction was properly issued on antitrust grounds and therefore affirm, without reaching the Williams Act claims. 1
Mindful that target companies are quick to seek refuge in § 7 against an unfriendly takeover, see Missouri Portland Cement Co. v. Cargill, Inc., 498 F.2d 851, 854 (2d Cir.), cert. denied, 419 U.S. 883, 95 S.Ct. 150, 42 L.Ed.2d 123 (1974), we also recognize that when a takeover threatens horizontal integration, the courts have a clear duty to weigh carefully the claim for a preliminary injunction, F. & M. Schaefer Corp. v. C. Schmidt & Sons, Inc., 597 F.2d 814 (2d Cir. 1979) (per curiam ); Gulf & Western Industries, Inc. v. Great Atlantic & Pacific Tea Co., 476 F.2d 687 (2d Cir. 1973); Allis-Chalmers Mfg. Co. v. White Consolidated Industries, Inc., 414 F.2d 506 (3d Cir. 1969), cert. denied, 396 U.S. 1009, 90 S.Ct. 567, 24 L.Ed.2d 501 (1970), even though the true concerns of the "private attorney general" may be more "private" than "attorney general." If the effect of a proposed takeover may be substantially to lessen competition, the target company is entitled to fend off its suitor. Our focus is therefore not upon Grumman's motivation for bringing this suit, but upon the adequacy of its preliminary showing that the proposed takeover will violate § 7.
1. Carrier-Based Aircraft. As both sides point out, the carrier-based aircraft
market has unusual characteristics. In this country there is only one buyer, the Defense Department. It decides which companies will be invited to submit bids for new planes. Bidding competitions occur infrequently and entail enormous costs. Grumman's evidence indicated that development of a proposal for the VTX, a carrier-based training aircraft, would cost more than $30 million. As for sales of currently available models, the District Court accepted Grumman's evidence that in the past three years the total for carrier aircraft was approximately $11 billion, divided among only four manufacturers: Grumman, 41.5%, Vought (alone and with Lockheed), 7.7%, and McDonnell Douglas, 50.8%. Plainly, this market is a "tight oligopoly," Stanley Works v. Federal Trade Commission, 469 F.2d 498, 504 (2d Cir. 1972), cert. denied, 412 U.S. 928, 93 S.Ct. 2750, 37 L.Ed.2d 155 (1973), in which it is important to prevent "even slight increases in concentration." United States v. Continental Can Co., 378 U.S. 441, 462, 84 S.Ct. 1738, 1749, 12 L.Ed.2d 953 (1964).
LTV challenges the Court's assignment to Vought of a 7.7% market share. That share represents $734 million in sales of the A-7 and $110 million in sales of the S-3 during the past three years. Apparently not disputing $533 million in revenue from A-7's in 1979 and 1980, LTV challenges the $201 million figure for 1981 on the ground that $112.6 million of the 1981 total represents A-7K's, which are land-based trainers for the Air National Guard, and $79.5 million represents modifications of existing aircraft. Grumman responds that the A-7K's are properly included since the planes are designed for carrier use and their sale keeps in operation a...
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