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August 4, 1986


The opinion of the court was delivered by: KRAM



 Plaintiffs Macfadden Holdings, Inc. and Macfadden Acquisition Corp. (collectively "Macfadden") and defendants JB Acquisition Corp., BJ Holding Corp., and Reliance Capital Group, L.P., (collectively "Reliance") are competing tender offerors for outstanding common stock of John Blair and Company ("Blair"). Their struggle has involved litigation in the Delaware state and federal courts as well as in Washington, D.C.

 In this case, Macfadden alleges three causes of action against Reliance. First, Macfadden claims that Reliance's tender offer for outstanding shares of Blair common stock contains material misrepresentations of fact, and Reliance's acceptance of shares for payment tendered pursuant to the offer violates Section 14(e) of the Securities Exchange Act of 1934, 15 U.S.C. § 78n(e) (1982) (the "Williams Act"). Second, Macfadden claims Blair's failure to disclose its plans regarding the expiration date of its tender offer violates Rule 14d-6(d) promulgated under the Securities and Exchange Act of 1934. 17 C.F.R. § 240.14d-6(d) (1985). In Count Three, Macfadden claims that Reliance's failure to pay promptly for the shares tendered pursuant to its tender offer violates Rule 14e-1(c) promulgated under the Securities and Exchange Act of 1934. 17 C.F.R § 240.14e-1(c) (1985).

 Macfadden seeks a declaration that Reliance's acceptance for payment of Blair shares was illegal and invalid, and a preliminary and permanent injunction prohibiting Reliance from refusing to allow Blair shareholders to withdraw their shares from Reliance and compelling Reliance to return the shares they have accepted for payment but for which they have not promptly paid.

 The parties stipulated that Macfadden would submit a motion for summary judgment on an accelerated basis. This case is now before the Court on plaintiff's summary judgment motion. Although Reliance did not file a cross-motion for summary judgment, it asks that summary judgment be granted in its favor and that the Court dismiss the complaint.

 A motion for summary judgment lies only when there is no genuine issue of material fact. This Court's role is to determine whether there are issues to be tried. Heyman v. Commerce and Ind. Ins. Co., 524 F.2d 1317, 1319-20 (2d Cir. 1975). The burden is on the moving party to show that no such issues exist. Adickes v. Kress and Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970). In testing whether the movant has met this burden, the Court must resolve all ambiguities against the movant. Heyman, 524 F.2d at 1320. Nonetheless, "the mere possibility that a factual dispute may exist, without more, is not sufficient to overcome a convincing presentation by the moving party." Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir. 1980) (emphasis in original). Speculation, conclusory allegations, and mere denials are not enough to raise genuine issues of fact.

 The parties have made extensive submissions to the Court which the Court has considered. The relevant facts are not disputed. The Court finds there is no issue as to any material fact and the following represents the Court's findings of fact.


 Macfadden is in the publishing business, selling more than 35 million magazines annually. It also owns a 50 percent interest in a television production company. Blair is a communications company with interests in direct mail marketing services, television and radio station ownership, and television programming. Blair's television and radio stations are licensed pursuant to the Federal Communications Act of 1934, 47 U.S.C. § 151 et seq. (1982) (the "Communications Act"). See 47 U.S.C. § 301. Reliance's major businesses are insurance, real estate, and consulting and technical services.

 The Communications Act prohibits the transfer of a broadcast license without permission from the Federal Communications Commission ("FCC"). 47 U.S.C. § 310(d). The FCC considers applications for transfer of a broadcast license as if the proposed transferee were applying for the license under 47 U.S.C. § 308, which establishes standards for awarding licenses. 47 U.S.C. § 310(d).

 In ordinary circumstances, an applicant for transfer of a broadcast license must follow the "long form" application procedures mandated in 47 U.S.C. § 309. However, the FCC has implemented a special procedure governing license transfer in the context of tender offers for broadcast companies. See Policy Statement on Tender Offers and Proxy Contests, 59 R.R. 2d 1536 (1986). A tender offeror may make a "short form" application to the FCC for a special temporary authorization (STA) to have a voting trusteeship operate the broadcasting company pending receipt of long form approval. If the short form application is approved, the trustees would control the stock of the broadcast company in the period between consummation of the tender offer and receipt of long form approval. Once short form approval is obtained, the offeror may consummate the tender offer and pay for tendered shares, even if the FCC has not yet granted long form approval.


 On April 22, 1986, Macfadden commenced a hostile tender offer for all outstanding shares of Blair common stock at $25.00 per share. The offer was scheduled to expire at midnight on May 19, 1986. The offer was conditioned upon receipt of long form approval, or, at the discretion of Macfadden, short form approval, and upon the receipt of at least 5.4 million shares. Macfadden named Hugh L. Carey as trustee on its short form application.

 Blair, an unwilling target, negotiated a merger agreement with Reliance, which has signed on June 2, 1986. Pursuant to the merger agreement, Reliance would make a tender offer for up to 8 million and at least 5.9 million shares of Blair common stock at $27.00 per share.

 Reliance commenced its tender offer on June 5, 1986. The offer was scheduled to expire at midnight, July 2, 1986. Reliance reserved the right to extend the offer. Furthermore, "[pursuant] to the Merger Agreement, the Purchaser has agreed to keep the Offer open for a period equal to at least the lesser of 60 days and the date on which all conditions precedent to the obligations of the Purchaser to purchase any Shares in the Offer are satisfied or waived . . . ." Reliance's June 5, 1986 Tender Offer at 3.

 One condition to the offer was FCC approval of Reliance's short form application. The tender offer states, "[i]t is also a condition to the Offer that the . . . [FCC] shall have approved or consented to certain voting trust arrangements pursuant to which the four non-management directors of [Blair] will act as trustee under a voting trust agreement [short form approval] . . . ." Id. at 1. Pursuant to this condition, the offer informs shareholders "the Purchaser shall not be obligated to purchase any Shares if . . . the FCC shall not have approved or consented to the voting trust arrangement set forth .in the application (Short Form Approval) . . . ." Id. at 20. In fact, the Offer states that Reliance could not accept shares for payment without FCC approval. "To enable the Purchaser to accept Shares for payment within the time frame contemplated by the Offer . . . the Purchaser will seek prompt FCC short form approval . . . prior to obtaining the final FCC Long Form Approval . . . . "Id. at 22. The offer named Blair's four non-management directors, Frank K. Mayers, Herbert M. Shayne, Jackson W. Smart, Jr., and Robert L. Stone, as trustees. Id.

 The offer allowed shareholders to withdraw tendered shares until midnight, June 25, 1986. Shareholders could also withdraw tendered shares after August 3, 1986, if the shares had not yet been accepted for payment. Regarding the payment for shares, the offer states:

the Purchaser will accept and pay for shares validly tendered on or prior to the Expiration Date and not properly withdrawn . . . as soon as practicable after the latest of (i) the Expiration Date, (ii) the satisfaction or waiver of the conditions of the Offer, including the approval or consent of the FCC to the voting trust arrangement . . . (the "Short Form Approval") . . . (iii) the expiration or termination of the waiting period under Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 . . . and (iv) . . . . the expiration of any additional withdrawal period resulting from the commencement of a tender offer for shares by another bidder . . . .

 Id. at 3.

 The offer also describes the procedure for acceptance for payment of and payment for shares. "The Purchaser expressly reserves the right, in its sole discretion, to delay the acceptance for payment of, and the payment for, Shares in order to comply in whole or in part with any applicable laws." Id. at 4. The offer states, "the Purchaser shall be deemed to have accepted for payment (and thereby purchased) Shares . . . ." when it gives notice to the depositary that the shares have been accepted. Id. at 4. The offer distinguishes between acceptance for payment and actual payment, contemplating that acceptance for payment would occur prior to payment. "In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the depositary of certificates for such shares . . . ." Id. Once Reliance accepted the shares for payment, it would pay for them by "deposit of the purchase price for such Shares with the Depositary, which will act as agent for tendering Shareholders for the purpose of receiving payment from the Purchaser and transmitting payments to tendering Shareholders." Id. The Offer also indicated that there might be a delay between acceptance for payment and actual payment if more than 8 million shares were tendered and proration were required. In that instance, Reliance did not expect to pay for any shares " until approximately 10 NYSE trading days . . . ." Id. at 4-5. Reliance informed shareholders that "[u]nder no circumstances will the Purchaser pay interest by reason of any delay in making such payment." Id. Finally with regard to payment, the Offer stated "if any tendered Shares are not accepted for payment or paid pursuant to the Offer, certificates for such unpurchased Shares will be returned, as promptly as practicable following the expiration, termination, or withdrawal of the Offer." Id. at 5.

 Responding to the June 5 Reliance offer, Mcfadden made another tender offer on June 12, 1986 for up to 8 million and at lest 5.9 million shares of Blair common stock at $30.00 per share. The expiration date for the offer was midnight, July 10, 1986, and withdrawal rights expired at midnight, July 2, 1986. Although Macfadden had received short form approval for its April 25 tender offer, its June 12 offer was again conditioned on receipt of FCC short form approval should the FCC require such approval once again. *fn1" ...

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