United States Court of Appeals for the Seventh Circuit
113 F.3d 738 (7th Cir. 1997)
Centel Corporation (Centel) (defendant) planned its own sale through a competitive auction with the help of two investment-banking firms. After announcing that the firms were assisting with the sale, Centel’s stock price rose from $37 to $48 per share. However, there were no interested bidders for the purchase of Centel. Despite the lack of interest, Centel maintained an optimistic image in regards to the sale by issuing press announcements that described the process as going smoothly. Only seven bids were made for the purchase of Centel, all of which were low and ultimately rejected by Centel. A sale was negotiated with a non-bidder at $33.50 per share. Subsequently, a class action was brought by stock purchasers (plaintiffs), who claimed that investors had been misled by Centel’s optimistic press announcements. The district court granted summary judgment for Centel, and the plaintiffs appealed.
Rule of Law
Holding and Reasoning (Posner, C.J.)
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