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August 17, 1964

UNITED STATES of America, Plaintiff,
CHRYSLER CORP. and Mack Trucks, Inc., Defendants

The opinion of the court was delivered by: WORTENDYKE

In this action the plaintiff, United States of America, hereinafter Government, seeks injunctive relief by way of prevention of the consummation of a certain agreement, dated as of May 12, 1964, which has been entered into between Chrysler Corp., hereinafter Chrysler, and Mack Trucks, Inc., hereinafter Mack, providing for the purchase by Chrysler of all of the assets and business of Mack in exchange for certain convertible debentures of Chrysler in a principal amount estimated to be between $ 138,650,600 and $ 164,337,050. *fn1" The relief sought by the Government is predicated upon the allegations in the verified complaint, filed July 30, 1964, which charge that the consummation of the Purchase Agreement by the defendants will violate Section 7 of the Clayton Act, 15 U.S.C. § 18, and Section 1 of the Sherman Act, 15 U.S.C. § 1. This Court's jurisdiction is appropriately invoked under Section 15 of the Clayton Act, 15 U.S.C. § 25, and Section 4 of the Sherman Act, 15 U.S.C. § 4, and venue is appropriately laid in this District by reason of the fact that although Chrysler is a corporation of the State of Delaware and Mack is a corporation of the State of New York, both transact business within the State of New Jersey, 15 U.S.C. § 22. Both defendants have appeared and defended in the cause, and concede that each is engaged in interstate commerce within the meaning of the respective sections of the Clayton Act and of the Sherman Act under which the Government seeks relief.

Upon the affidavit of Walter D. Murphy, Esq., an attorney employed by the Antitrust Division of the United States Department of Justice, filed with the complaint in this cause, a temporary restraining order was issued, prohibiting the defendants, their officers, directors, agents, employees and all other persons acting in their behalf, from taking any further action to consummate the acquisition of the business and assets of Mack by Chrysler; and from making any changes directly or indirectly in the corporate structure, commercial operations and properties of the defendants; other than in the regular and ordinary course of business. The same order provided, however, that its restraint should not extend to the meeting of the shareholders of Mack, which had been previously duly noticed to be held on August 11, 1964, for the purpose of ratifying the action of Mack's board of directors in entering into and authorizing Mack's consummation of the acquisition agreement and plan referred to in the notice of the stockholders' meeting dated July 8, 1964.

 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; *fn2" (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. *fn3" 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, *fn4" 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: Chrysler Mack /-- /-- 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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