- 130 -
stock flowed to MB Parent. We agree with respondent that this
case is more like West Coast Mktg. Corp. than like Esmark, Inc.
There are differences, of course. MB Parent was not intended to
be, and has not been, liquidated as promptly as the intermediary
in West Coast Mktg. Corp. Additionally, MB Parent was putatively
formed by the acquirer rather than by the party divesting itself
of the property. Given the terms of MB Parent’s governing
documents and the structure of its several classes of stock,
however, it has no more function than the intermediary in West
Coast Mktg. Corp. By contrast to the facts in Esmark, Inc., here
there is no uncontrolled participation by persons who are not
parties to the contractual arrangement, such as the public
shareholders in Esmark, Inc., to give substantive economic effect
to the existence of MB Parent. To disregard the existence of
MB Parent is not to ignore any meaningful step in the transfer of
Bender from Times Mirror to Reed.
Second, petitioner asserts that “the evidence conclusively
establishes that the parties valued the MBP Common at
$1.375 billion.” Petitioner argues that the agreement of the
parties as to value was the result of arm’s-length negotiations
between Times Mirror and Reed. The arm’s-length negotiation,
however, led to the parties’ agreeing to adopt the form of
tax-free reorganization, which required a recital that the common
stock was the consideration being exchanged for the Bender stock.
Page: Previous 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 NextLast modified: May 25, 2011