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Court Upholds Ban on Hanson Stock Buying

September 18, 1985|Associated Press

NEW YORK — A federal appeals court Tuesday left in place, for the time being, a preliminary injunction that prevents Hanson Trust PLC from buying any more SCM Corp. shares or voting the shares that it now holds.

Barry A. Garfinkel, a lawyer for Hanson, told the U.S. 2nd Circuit Court of Appeals that the injunction issued by U.S. District Judge Shirley Wohl Kram last Saturday unfairly allows an investor group that includes Merrill Lynch and SCM management to proceed with its own offer.

"It's as if it is a football game and we're on the 5-yard line," he told the appeals panel. "The judge takes the ball, gives it to the other side and says to us, 'I'll give you the ball back after the game is over.' "

Garfinkel urged the court to stay the lower court order while it reviews the decision. But the appeals court instead promised that it would hear arguments on the validity of the injunction Friday and return a decision early next week.

The lawyer said a new tender offer by Hanson remained "an option."

On Monday, the Merrill Lynch investment group began its tender offer for 80% of SCM's stock at $74 a share, or a total of $740 million.

The investor group, called Merrill Lynch Capital Partners Inc., says a successful tender offer would be followed by a merger in which SCM's remaining shares would be converted into subordinated debentures--also valued at $74 a share--of the new, private company. In addition, Merrill Lynch and SCM said they agreed to place the assets of SCM's food and pigments businesses into an escrow account.

SCM previously granted the Merrill Lynch group an option to buy those business for $430 million. The group's offer, which is subject to a minimum of two-thirds of SCM's shares being tendered, expires Oct. 11, unless extended.

Kram issued the preliminary injunction against Hanson after SCM sued, claiming that the British conglomerate illegally bought SCM stock after withdrawing its latest hostile takeover bid. Hanson withdrew its tender offer last week after the Merrill Lynch group offered a higher bid of $74 a share, which totals $906.5 million for SCM's 12.25 million shares. Hanson had offered $72 a share.

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