Opinion ID: 399146
Heading Depth: 2
Heading Rank: 2

Heading: Failure to disclose inquiries from potential purchasers.

Text: 32 Appellants further contend that the proxy materials were rendered false and misleading by the failure of the SAVI board to disclose that, in addition to the Intercoast offer, it had received inquiries from four other potential purchasers. Appellants argue that this information was necessary to clarify the import of the statement in the proxy materials that (t)he terms of the proposed sale are more favorable than those of other recent proposals considered by SAVI. 6 33 Firm offers from other potential purchasers, if they are more favorable than the offer being endorsed by management, must be disclosed in proxy materials soliciting shareholder approval of a proposed sale of corporate assets. Gerstle v. Gamble-Skogmo, Inc., supra, 478 F.2d at 1294-95. There is no duty to disclose inquiries or indications of interest that do not fall within the category of firm or definite offers. See, e.g., Scott v. Multi-Amp Corporation, 386 F.Supp. 44, 65 (D.N.J.1974). Here, each of the inquiries from potential purchasers, except that from Shappel Industries, consisted of a single telephone call to the SAVI board during its meeting to consider Intercoast's one-day offer. The purpose of the calls was evidently to request a meeting with the SAVI board to discuss the possibility of a purchase. These last minute expressions of interest clearly do not constitute the type of firm or definite offer that must be disclosed. 34 While the Shappel proposal poses a slightly more difficult question, we nevertheless find that it was too uncertain and illusory to be considered a firm offer. Shappel informed the SAVI board through Pankey that it was interested in purchasing SAVI for $1,300 per share only if the Weir Canyon property could be developed within three years; if this condition could not be met, the price Shappel would be willing to pay would have apparently dropped to where SAVI would no longer be interested. It appears from the record that there was serious question whether the Weir Canyon property could be developed within three years. In addition, Shappel was not bound by the terms of its proposal, and had SAVI refused the Intercoast offer, Shappel could have withdrawn or changed its proposal. Thus, Shappel's proposal appears to be nothing more than a last minute effort to halt the sale; at best it was but a step in negotiating a purchase, with no assurance whatsoever that such negotiations would bear fruit or, if they did, whether the final terms would have been better than those offered by Intercoast. The failure to disclose the Shappel proposal and the other inquiries did not, therefore, make the proxy materials false or misleading.