- 6 - was delivered to petitioner at closing.4 Prior to the closing, approximately 80 percent of petitioner's stock was beneficially owned, assuming conversion of certain preferred stock, by L'Air Liquide S.A. (L'Air Liquide), a French corporation. Approximately 2 percent of petitioner's stock was owned by officers and directors of petitioner. The remaining 18 percent of petitioner's stock was publicly owned and was traded on the over-the-counter market. After the closing, 4We note that the percentage of post-July 1978 earnings provision of the Contract was not literally followed. On brief, petitioner explains this as follows: We point out, for purposes of completeness, that Chemetron's contractual obligation to deliver 50 percent of the pre-tax earnings of the IGD Division from July 3, 1978 to the day immediately preceding the closing merely reflected the parties' initial expectation (ultimately unrealized) that the closing would take place in the third quarter of 1978, but before the record date for the third quarter LAC dividend. That is, the parties expected that Chemetron would be receiving the full third quarter dividend from LAC even though it would only have owned the LAC stock for a portion of the third quarter. Thus, the "50 percent of pre-tax earnings" amount referred to in the Contract merely refers to (i) the 25 percent of pre-tax earnings balancing, or mirror, amount negotiated by the parties, plus (ii) an additional 25 percent of pre-tax earnings from the beginning of the third quarter dividend period to the anticipated closing date, representing the portion of the third quarter LAC earnings that would be paid as a dividend to Chemetron after the (originally anticipated) closing date even though allocable to a period prior to which Chemetron would actually own the relevant LAC shares. It is apparent that the parties sought carefully and minutely to negotiate the economics of the transaction. However, the closing of the transaction ultimately did not take place prior to the record date for the third quarter dividend for 1978, as the parties had initially expected. Rather, as a result of the protracted FTC investigation, the closing actually took place on March 28, 1979--i.e., at the close of the first quarter of 1979, but after the record date for the first quarter dividend. Therefore, Chemetron never had to "disgorge" a portion of a dividend allocable to a period during which it did not actually own the LAC stock, and no "50% of pre-tax earnings" amount ever had to be calculated or paid.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011