Opinion ID: 456274
Heading Depth: 2
Heading Rank: 2

Heading: Sale of Subsidiaries

Text: 15 Plaintiffs contend that defendants should have disclosed that Nucorp was exploring the sale of two of its most profitable subsidiaries. They argue that Nucorp was considering this sale because it needed cash to avert financial problems. As evidence, plaintiffs rely on a cryptic note written by a Lehman Brothers' merger and acquisition partner. That note, in part, reads Lots of acq. opportunities. Could use cash. Plaintiffs stress the [c]ould use cash notation. Plaintiffs also assert that Del-Tex and Maverick Tube represented a high percentage of Nucorp's revenue. They conclude that this evidence considered together shows that Nucorp had serious financial problems that should have been disclosed. Defendants, however, dispute plaintiffs' contention that Nucorp had a cash flow problem. In his deposition, Frank testified that Nucorp was exploring divestiture in order to capitalize on the high value of the subsidiaries. 16 The district court found that the plaintiffs failed to controvert Frank's testimony that Nucorp wanted to capitalize on the high value of its subsidiaries and held that plaintiffs presented no evidence that Frank knew that the proposed sale indicated cash flow problems. We agree with the district court that there was no evidence from which a jury could have found the proposed divestiture material to a reasonable investor. The evidence offered does not imply that Nucorp had cash flow problems that warranted disclosure.