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merger, notwithstanding, demonstrates the extent to which the
right to the merger proceeds was fixed once a majority of the
outstanding shares of AHC stock had been tendered or guaranteed.
A fire that totally destroyed AHC's product manufacturing plant
could not shake the resolve of DC Acquisition and CDI in
acquiring the central asset of AHC, Sybil Ferguson and the
relationships that she had created. DC Acquisition's offering
price represented a premium of approximately 1,084 percent over
the tangible book value of AHC shares as of June 30, 1988. The
value of AHC was not embodied in the company's tangible assets.
The value of AHC, and the asset that DC Acquisition and CDI
sought, was primarily in the person of Sybil Ferguson and the
relationships that she had created. As long as the understanding
was in place between DC Acquisition and CDI and the Fergusons
that Sybil Ferguson would maintain continued involvement with
AHC, the consummation of the merger was a foregone conclusion
once the shareholders of AHC “approved” of the merger. To accept
any other conclusion would eviscerate established principles of
the anticipatory assignment of income doctrine by ignoring the
reality and substance of events and attaching significance to
remote and hypothetical possibilities.
III. Conclusion
The reality and substance of events surrounding the merger
agreement, the tender offer, and the gifts to the Charities
indicate that the stock of AHC was converted from an interest in
a viable corporation to a fixed right to receive cash prior to
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