(1)Is the sale of a principal asset essentially the same as a sale of shares? (2) When majority shareholder sells its principal asset, but has stipulated to a right of first option to purchase shares of stock, has the majority breached the option agreement? (1) No. Sale of majority’s blocs shares is not the same thing as a sale of either all or some of the holding company’s assets. (2) No. If the agreement called for a first right to purchase assets, it would be enforceable, but under the terms set forth in the agreement, the contract does not clearly confer this right. CLASS NOTES: He essentially gets two rights: 1. If Jensen sell their stock, they have to offer it to him first at the same price; and 2. If he declines, he has the right for his shares to be bought by corporation (essentially, the company doing the buyout) if he so chooses New Wisconsin really only wanted the bank. First, the deal was structured as a merger of a subdivision of Jensen-Sundquist and First Wisconsin. Frandsen spoke out against it and mentioned his right of first refusal. In the second deal, JS sells sub (First Bank of Gettysburg) to FW for $88 per share, than it liquidates and gives out as dividends. Zetlin v. Hanson Holdings, Inc. (Minority Shareholders Are Not Entitled to Equal Disbursement of Premium Prices Paid to Other Shareholders for Control) Zetlin v. Hanson Holdings, Inc. (NY.1979)(p.697-700) Facts: Zetlin owned 2% of shares outstanding in corp. Silvestri family owned 44.4% and sold its interest to Flintkote Co. for a premium price of $15 p/share, when shares were selling on open market for $7.38. Issue: Are minority shareholders entitled to an opportunity to share equally in any premiums paid for a controlling interest in the corporation? Holding: No. This rule would change how stock interests are transferred, thereby requiring controlling interest to be transferred only by means of an offer to all stockholders, i.e. a tender offer. Minority shareholders may not inhibit majority shareholders’ financial interests. Perlman v. Feldmann (A Control Premium Must Be Shared Among all Stockholders if it Represents the Transfer of a Corporate Asset) Perlman v. Feldman n (NY.1955)(p.700-704) Facts: Korean war. Price controls on steel even though there was a high demand for it. So, steel producers will hold back steel. The buyer, Wilprot, wanted to purchase Newport so they have access to the underlying steel. This wouldn’t be so problematic if not for the price restriction, but now, the buyer has direct access to what the company sells, at the fixed/set price. They are injured because of the “gray market.” 80 80 80
81 81 81 CLASS NOTES: Inconsistent with Zetlin. The distinction is that if there is a sale of corporate opportunity, it is a breach of fiduciary duty. If buying 60% is for the purpose of getting to 100% of an asset held by the company, the purchase will not be upheld in court. This purchase essentially takes away the other 40% that the minority shareholders are entitled to.
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