Opinion ID: 476848
Heading Depth: 2
Heading Rank: 2

Heading: Expiration Date of Withdrawal Rights and Offer

Text: 47 The district court did not determine whether Reliance represented that it would not close its offer or allow withdrawal rights to expire before the FCC approved its Short Form application. In light of our rejection of the basis of the district court's opinion, however, we must resolve the question, and we believe that Reliance did not so represent its intentions. First, the cover of both the June 5th Offer and the June 19th Supplement stated, in bold-faced, capital letters, that the offer and the withdrawal rights would expire on a certain, definite date. On July 2nd, Reliance issued a press release extending the expiration date, proration period and withdrawal period for its tender offer to 12:00 Midnight, New York City time, on Thursday, July 3, 1986. July 2nd Press Release. The press release also stated that as of that time, 425,000 shares of Blair common stock had been tendered pursuant to the offer. Thus, the apparent reason for the extension of the offer was because an insufficient number of shares had been tendered into the Reliance offer by July 2nd. 48 On July 3, 1986, Reliance announced in another press release that if it did not receive a majority of the Blair shares in its tender offer, which was to expire at midnight that night, it would extend the offer to midnight, New York City time on July 7, 1986. 4 In addition, Reliance stated that if it did not receive a majority of Blair shares by midnight, it would also extend withdrawal rights under its offer to midnight on the 7th. The obvious import of this press release was that the Reliance offer and the withdrawal period would close at 12:00 midnight on the 3rd if a majority of Blair shares were tendered into its offer. Between 4:00 p.m. and midnight, more than seven million Blair shares were tendered into the Reliance offer and thus, according to the clear and unambiguous representations of Reliance, the offer and the withdrawal rights were allowed to expire. 49 The foundation for Macfadden's position is a single sentence in the June 5th Offer, viz., the sentence referring to the Merger Agreement between Blair and Reliance, whereby Reliance promised to keep the offer open for sixty days or until, among other things, FCC Short Form approval was either obtained or waived. This sentence, on its face, is not a promise to keep the offer open until the FCC approved the Short Form application, because it provides that Reliance may waive any condition. Accordingly, even if FCC Short Form approval were a condition to Reliance's accepting shares for payment, Reliance, in its discretion, could waive that condition. Although no waiver occurred here, the possibility of such a waiver was clear and thus no reasonable shareholder could have read the statement in the offer as an unconditional promise to extend the offer until the FCC approved Reliance's voting trust proposal. Moreover, no shareholder could have understood the statement to be a promise of any sort to the shareholders, since it merely referred to a promise that had been made by Reliance to Blair in the Merger Agreement. 50 More significantly, the sentence referring to the Merger Agreement provision was contained only in the June 5th Offer. The June 19th Supplement and the press releases issued on July 2nd and 3rd stated only that the offer and the withdrawal period would expire on a fixed date. Indeed, from the very inception of Reliance's offer, the shareholders were informed that the offer and the withdrawal rights would expire at an exact time on a specific, known date. The statement informing the shareholders of this date was printed on the cover of the June 5th Offer in bold-faced, capital letters. When Reliance amended its offer, it again informed the shareholders of the expiration date of the offer and the withdrawal period by printing the exact time and date--midnight, July 2, 1986--on the cover of the June 19th Supplement in bold-faced, capital letters. Similarly, the press releases referred only to a specific time and date. Certainly, the shareholders, including Macfadden, understood the July 3rd Press Release to mean that the offer and withdrawal period would expire that night if Reliance obtained a majority of Blair's shares, as was evidenced by the tendering into the Reliance offer of more than seven million shares in an eight hour period. 51 In sum, we conclude that Reliance consistently represented that the offer and withdrawal period would expire at a fixed time on a specific date. Although Macfadden was able to discover some statements in the offering materials that arguably were inconsistent with these clear representations, we are not persuaded that any shareholder could possibly have been led to believe that the offer and withdrawal period would not close at midnight, July 3, 1986. As we previously have stated: We are ... not inclined to subject every tender offer to a nit-picking judicial scrutiny which will in the long run injure shareholders by preventing them from taking advantage of favorable offers. Data Probe Acquisition Corp. v. Datatab, Inc., 722 F.2d 1, 5 (2d Cir.1983), cert. denied, 465 U.S. 1052, 104 S.Ct. 1326, 79 L.Ed.2d 722 (1984). Since Reliance did not misrepresent or omit to state any material facts in connection with its tender offer, we hold that it did not violate the federal securities law. Accordingly, we reverse the summary judgment of the district court, vacate the injunction, and remand the case with directions to enter judgment in favor of Reliance. 52 Macfadden also claimed that Reliance violated SEC Rule 14d-6(d), and the district court agreed, noting that the violation provided an alternative basis for its holding. See 641 F.Supp. at 466. That rule provides: A material change in the information published or sent or given to security holders shall be promptly disclosed to security holders in additional tender offer materials. 17 C.F.R. Sec. 240.14d-6(d); see Cardiff Acquisition, Inc. v. Hatch, 751 F.2d 917, 921 (8th Cir.1984). In light of our conclusion that Reliance did not misrepresent or omit to state its intentions regarding when the offer and withdrawal rights would expire and when shares would be accepted, we hold that the district court erred in finding that Reliance violated rule 14d-6(d).