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not been our assumption that we would immediately turn
around and use these resources as a war chest to
finance a major acquisition program, and over the past
several months we tested this presumption by examining
in detail the prospect for value creation and the
acceleration of earnings growth through acquisitions.
* * *
All subsequent reports to the board, the shareholders, and the
SEC represented that the cash proceeds of the divestiture of
Bender were controlled by Times Mirror and were being used for
Times Mirror’s strategic repurchase of stock and new
acquisitions. Although petitioner disputes the legal
significance of these representations, it has never suggested
that the representations were not entirely consistent with the
terms of the documentation of the Bender transaction.
In 1999, Times Mirror, as manager of the LLC, effected a
$21,160,000 cash dividend on MB Parent’s common stock. Reed
agreed to the amendments to MB Parent’s corporate documents
because Reed had unequivocally given up any interest in the
$1.375 billion or in the earnings on that amount.
Consideration for the Transfer of Bender to Reed
For purposes of section 368, the basic factual determination
to be made is whether, under the contractual arrangements, the
consideration received by TMD, the formal “divestor” of Bender,
from MB Parent, the formal “divestee”, was, as petitioner
contends, common stock of MB Parent worth at least $1.1 billion
or whether, as respondent contends, the consideration received
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