Opinion ID: 2509467
Heading Depth: 1
Heading Rank: 4

Heading: Equal Price

Text: We address first Harris's point that the price under the put-and-call option must be equal regardless of which party buys. Shareholders enter into buy-or-sell contracts in order to provide a deadlock-breaking mechanism that is fair to both participants. The underlying premise of such agreements is that the price proposed by the offeror will be the same whether the offeror sells its shares or buys the shares of the other shareholder. The fact that the offeree is free to buy or sell at the same price per share is the offeree's guarantee of fairness. [6] Even where there is price equality, the contract may prove not to be fair if one party lacks the financial resources of the other party. [7] But the important point is that price equality is the basic assumption of agreements of this sort. Price equality is lacking in Ahtna's declaration. If Harris decided to buy Ahtna's shares the price that he would have to pay would be calculated by adding to the $6.87 per share price his assumption of AGSC's liabilities to Ahtna, his assumption of Ahtna's guarantees, and whatever cost he would have to incur to obtain written releases from sureties of Ahtna's continuing liability. Ahtna has acknowledged that items B and C of its offer involve sums substantially exceeding $1,000,000. [8] Thus Harris might well have had to pay, as buyer of Ahtna's shares, $35,037 ($6.87 per share times 5,100), plus an amount substantially in excess of $1,000,000. By contrast, Ahtna, as buyer of Harris's shares would have to pay only $33,633, $6.87 per share. Ahtna's argument that the price would have been equal if Harris had matched Ahtna in making loans to AGSC and had been a co-guarantor of AGSC's bonding seems irrelevant. Those conditions did not exist, nor, apparently, was Harris obligated to lend funds to AGSC or act as a guarantor of its bonding. We thus agree with Harris that the put-and-call option required that the price to each party be equal and that the Ahtna declaration did not meet this requirement.