Opinion ID: 476848
Heading Depth: 2
Heading Rank: 1

Heading: Acceptance of Shares for Payment

Text: 37 As stated above, the district court concluded that, regardless of when the offer and withdrawal rights were to expire, Reliance had represented that it would not accept shares for payment until after FCC approval was obtained. The key sentence supporting the district court's conclusion is located at page 22 of the June 5th Offer: To enable the Purchaser to accept Shares for payment ... the Purchaser will seek prompt FCC Short Form Approval.... The district court found that this sentence clearly implie[d] that Reliance could not accept shares for payment until the FCC granted short form approval. 641 F.Supp. at 463. 38 According to the district court, Reliance represented that there would be prompt payment upon acceptance, subject only to the delays occasioned by proration. The court read the offer to mean that, after acceptance: 39 The only possible delay in payment Reliance disclosed [in] its tender offers would be due to prorating shares if more than 8 million shares were tendered. [Reliance Offer at 4]. Reliance did not inform shareholders there would be any delay in payment while it awaited FCC approval. Finally, Reliance stated that any shares not accepted for payment would be returned promptly. Id. at 5. Thus, once Reliance accepted shares for payment, the only delay shareholders expected would be due to proration. Reliance did not say it would delay payment while awaiting FCC approval. 40 641 F.Supp. at 464 (emphasis added). 41 We disagree. The Reliance offer, in several places, distinguished between acceptance for payment and payment. In addition, the offer clearly stated that actual payment would be delayed until after receipt of FCC approval. At page 22 of the June 5th Offer, Reliance informed shareholders that [a]ny obligation of the Purchaser to pay for Shares tendered pursuant to the Offer shall be conditioned on receipt of the Short Form Approval. At page 4 of the Offer, Reliance informed shareholders that Reliance expressly reserve[d] the right, in its sole discretion, to delay the acceptance for payment of, and the payment for, Shares in order to comply in whole or in part with any applicable laws. On the next page, the offer stated that tendered shares may be retained if Reliance is unable to accept for payment or pay for Shares pursuant to the Offer for any reason.... June 5th Offer at 5 (emphasis added). The offer also stated: There can be no assurance that ... [regulatory] approval ... would be obtained without substantial conditions ... which may cause the Purchaser to delay the acceptance for payment or any payment for Shares.... June 5th Offer at 21 (emphasis added). Finally, the offer stated: Any obligation of the Purchaser to pay for Shares tendered pursuant to the Offer shall be conditioned on receipt of the Short Form Approval. June 5th Offer at 22 (emphasis added). 42 Thus, contrary to the apparent import of the sentence focused on by the district court and Macfadden, the offer did state, in clear and unambiguous terms, that payment might be delayed by the absence of FCC Short Form approval. Indeed, the one sentence supporting Macfadden's position is not so clearly at odds with these other statements, since it merely states that Reliance will seek FCC Short Form approval in order to enable it to accept shares for payment within the contemplated time frame. Accordingly, we hold that the district court erred in finding that Reliance had represented it would not accept shares for payment until after receipt of FCC Short Form approval. More important, we conclude that none of Reliance's statements can fairly be read as a representation that Reliance would not accept shares for payment until after the FCC approved its Short Form application. 43 Moreover, if this alleged misrepresentation were the only basis for finding that Reliance violated the Williams Act, we still would be compelled to reverse the summary judgment granted in Macfadden's favor. Even assuming that Reliance had made such a representation, a proposition we do not accept, that representation could not have been material to any tendering shareholder unless that shareholder also believed that he retained his right to withdraw his shares from the Reliance offer pending FCC approval. 3 Since we hold, as discussed more fully below, that Reliance did not represent that withdrawal rights were to remain open, it would not have mattered to any shareholder that Reliance had accepted his shares for payment, so long as the deal was consummated by August 3, 1986, when his withdrawal rights were scheduled to reopen according to the June 5th Offer. This result obtains, because a tendering shareholder, on July 3rd, would have known that he was tying up his shares in the Reliance deal until August 3rd. 44 The district court found that Reliance had represented that it would promptly return shares that had not been accepted for payment. Consequently, the court concluded that if a shareholder tendered and FCC Short Form approval was not forthcoming, Reliance, not being able to accept the shares for payment, would promptly return them. The shareholders then would have the opportunity to tender to a higher bid if one were made. We disagree with this analysis for a number of reasons. First, we believe that Reliance could lawfully accept Blair shares for payment without prior FCC approval. This view is in accord with the SEC's position. See Interpretative Release Relating to Tender Offer Rules, Exchange Act Release No. 34-16623, 3 Fed.Sec.L.Rep. (CCH) p 24,284I, at 17,758 (Mar. 5, 1980) (Nothing in the rules prohibits offers under the terms of which the acceptance for payment is conditioned upon fulfillment of a condition requiring regulatory approval, but regulatory approvals may be required before a bidder will be permitted to actually purchase shares....). 45 Moreover, we believe the statement regarding the prompt return of shares, which is included in a section dealing with proration, is merely intended to advise shareholders that shares which are not accepted and paid for because of proration will be returned promptly. Indeed, it would make little sense to permit Reliance to accept shares for payment before actual payment, but require it to return the shares promptly after accepting them. Finally, the offer itself states that shares may be retained if Reliance is delayed in its ... payment for any Shares ... for any reason.... June 5th Offer at 5. 46