timely filed in behalf of the defendants. Upon return of the order to show cause, oral testimony and documentary exhibits were presented in supplementation of the averments contained in the moving and answering affidavits. The hearing upon the return of this order to show cause continued beyond the expiration date fixed in the temporary restraining order; but during that hearing, the restraint of the order was extended by the Court with consent of the parties. At the conclusion of the hearing, on August 10, 1964, the parties agreed that the restraint imposed by the order should be deemed to be continued pending the Court's decision upon the pending application for preliminary injunction. During the period of the extension of the restraint, drafts of proposed findings of fact were submitted to the Court by the respective parties, and a reply brief in behalf of the Government was submitted to and considered by the Court.
The terms of a written agreement, dated as of May 12, 1964, and duly executed in behalf of each of the defendant corporations pursuant to authorization of their respective boards of directors, provided for a sale of all of the assets and business of Mack to Chrysler in exchange for Chrysler 4 3/8% Subordinated Debentures due January 1, 1985, convertible on or before December 31, 1969, and the assumption by Chrysler of all of Mack's liabilities and obligations. The parties further agreed therein that, following the consummation of the sale, Mack would be completely dissolved and liquidated, and that, as soon as feasible after the closing date, August 12, 1964, Mack would withdraw all authority to do business as a foreign corporation in States other than the State of its incorporation; and that promptly after Mack's dissolution, and in accordance with the laws of the State of New York, it would be completely liquidated by the payment in cash of the full amount due its preferred stockholders ($ 54.00 per share plus accrued dividends), and by the distribution, by the designated liquidating agent, of Chrysler debentures to Mack common stockholders, at $ 50.00 principal amount of debentures for each share of Mack common stock.
The agreement further provided that Mack's board of directors might, without further action of its stockholders, abandon the plan prescribed by the Purchase Agreement if the Agreement were terminated in accordance with its terms. Among the conditions precedent to Chrysler's obligation to consummate the purchase as stated in the agreement are (1) the approval of the plan by the holders of at least two-thirds of all Mack stock, with not more than 5% Of the common stock dissenting;
(2) consent of the holders of Chrysler's 3 1/2% Promissory note to the creation and assumption of indebtedness incident to the acquisition of Mack; (3) procurement by Mack of consents of the holders of its 5 1/8% Subordinated Debentures and its 5 3/8% Senior notes, to such modification as Chrysler might require; and (4) procurement by Mack of such modifications as Chrysler might require in Mack's outstanding contracts and in its various employee, pension, retirement and other benefit plans. The Agreement further provided that either of the parties thereto might terminate the purchase Agreement at any time if an action or proceeding were instituted or threatened which, in the opinion of counsel for the party desiring to terminate, made it 'impossible or inadvisable' to consummate the transaction. The Agreement also expressly contemplated its termination at any time by the mutual consent of the boards of directors of the parties to it.
The closing under the Agreement was fixed by the terms thereof for August 19, 1964 (thereafter advanced to August 12, 1964), subject to the right in either of the parties to postpone the closing for not more than 45 days.
The mutual consent of the respective boards of directors of the defendants was, by the terms of the Agreement, sufficient to permit of the abandonment and termination of the Agreement at any time prior to its closing, without resultant liability on the part of either of the parties to the other. In the event the closing contemplated by the Agreement was not consummated, each of the parties became obligated to pay its own expenses in connection therewith.
Pursuant to the requirements of Rule 52(a) of the Federal Rules of Civil Procedure, the Court makes the following findings of fact upon the affidavits filed and the evidence received upon the return of the order to show cause why a preliminary injunction should not be allowed:
Chrysler is a progressive, diversified corporation engaged primarily in the manufacture and sale of automotive products, including trucks. It is the third largest corporation in the automotive industry and the seventh largest industrial corporation in the United States. It ranks fourth in size among the corporations manufacturing and selling motor trucks. Chrysler's after-tax earnings have increased in recent years. In 1963 its total net sales were approximately $ 3.5 billion. Its earnings in 1963 were a record high of $ 161.6 million as compared with $ 32.2 million in 1960, $ 11.1 million in 1961 and $ 65.4 million in 1962. Its total assets on December 31, 1963 were approximately.$ 2.1 billion.
Mack manufactures and sells, principally, motor trucks having a gross vehicle weight of 26,000 pounds or more,
and is the nation's oldest and largest manufacturer of heavy duty motor trucks. Its 1963 sales of $ 305.8 million were the highest in the company's history. It ranked 181st among American industrial corporations, and as of December 31, 1963, its total assets were $ 235,836,711.
Although, during the course of the argument and in the affidavits submitted in behalf of the defendants, it was represented to the Court that Chrysler intended, after acquisition of the assets and business of Mack, to operate Mack's business as a division of the business of Chrysler, the purchase Agreement contains no provision to that effect; nor is it expressed in the plan of complete liquidation and dissolution which Mack's shareholders were asked to, and did, approve.
Upon the evidence submitted, it appears to this Court that there is a reasonable probability that the Government will prevail upon a plenary trial of the cause on the merits. There has been a prima facie showing that the consummation of the purchase Agreement by the defendants will be violative of Section 7 of the Clayton Act.
The United States as a whole is the appropriate 'section of the country' within the meaning of that phrase as used in Section 7 of the Act, with which we are here concerned.
The following table discloses the market share and position of each of the defendants in each of the lines of commerce relevant to Section 7 of the Clayton Act:
Line of Commerce
Share (%) Rank
Share (%) Rank
All trucks 7.2 4 1.0 7
19,500-26,000 lbs. 5.2 6 0.6 7
26,001-33,000 lbs. 3.0 6 12.8 4
33,001 lbs. and over 0.8 7 16.6 3
Diesel trucks over 19,500 lbs. 0.9 6 25.4 2
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