Opinion ID: 2974252
Heading Depth: 2
Heading Rank: 1

Heading: SPX and Dana deal

Text: In 1996, SPX began negotiating the sale of its Sealed Power Division to Dana, a multinational automotive supply corporation. By this time, the Sealed Power Division consisted of -3- No. 05-4094 Grupo Condumex v. SPX Corp. several companies, including (1) SP NV, which owned forty percent of Promec, and (2) a fiftypercent interest in the Allied Ring Corporation. Before signing a letter of intent with Dana, SPX notified Condumex’s CEO, Pedro Ruiz, of the impending deal. Ruiz objected to the sale, and a few days later Condumex asserted that it had a right of first refusal under Promec bylaws. For the next several months, Condumex repeatedly informed SPX and Dana that it wished to exercise its first refusal rights pursuant to the bylaws. Both SPX and Dana maintained, however, that Condumex had no right of first refusal under Promec’s bylaws because, although SP NV was being sold, SP NV would continue to own the Promec shares and thus the shares would not be transferred. SPX and Dana completed the sale in February 1997. The terms of the sale were set forth in the Asset Purchase Agreement (Purchase Agreement), which contained, among other things, several warranties by SPX. Section 3.2 of the Purchase Agreement warranted that “no person has any . . . right of first refusal . . . in connection with . . . shares or interests owned by [SPX].” Section 3.1(c) warranted that the sale would not “violate any provision of . . . any . . . agreement . . . to which [SPX] or any of its Affiliates is a party.” Finally, § 3.1(d) warranted that SPX had “all requisite power to transfer to [Dana] good and marketable title to the Assets free and clear of all Encumbrances.” In November 1998, Condumex brought a diversity action against SPX and Dana, alleging that the sale of SPX’s interest in Promec to Dana violated its right of first refusal in both the 1981 shareholders’ agreement and Promec’s bylaws. Condumex sought a declaration that the sale was invalid and an order directing Dana to deliver the Promec shares to the secretary of Promec so that the shares could be reissued to Condumex. After a bench trial, the district court sided with -4- No. 05-4094 Grupo Condumex v. SPX Corp. Condumex, finding that SPX had violated the right of first refusal contained in the shareholders’ agreement. The court did not address Condumex’s argument that the transaction also violated Promec’s bylaws. The court therefore ordered Dana to transfer the Promec shares to Condumex in return for a payment of $15 million.