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In re Meyers Parking System Inc.

Securities and Exchange Commission
Exchange Act Release No. 26,069 (1988)


The Fink-Gordon Group (Fink-Gordon) proposed a merger between Meyers Parking System Inc. (MPS) and MPS Acquisition Corporation (Acquisition) on March 18, 1988. Acquisition was controlled by Fink-Gordon and had been created for the purpose of completing the merger. Fink-Gordon held about 80 percent of MPS’s outstanding stock. The remaining 20 percent of MPS’s shareholders would be entitled to a merger price of $22 per share. MPS’s board appointed a special committee to evaluate the proposed merger. The committee met with difficulty and was dissolved. On May 11, Bear Stearns & Co. (Bear Stearns) was retained to evaluate the merger’s fairness. On June 28, Bear Stearns completed the analysis and informed Fink-Gordon that the merger price of $22 per share was unfair. After negotiations between Bear Stearns and Gordon-Fink, it was determined that $29.50 per share was fair. That day, on July 6, the board met to consider the merger at the new price. Bear Stearns gave a short presentation, explaining how the valuation of $29.50 per share had been reached. The board proposed and approved the merger resolution without significant analysis of the factors that supported the valuation of $29.50 per share. On July 8, MPS filed a Schedule 13E-3 transaction statement, and on July 18, Bear Stearns provided MPS with a written opinion stating that the merger price was fair. MPS’s Schedule 13E-3 stated that the factors considered in determining the fairness of the price included the current and historical market price of the shares, the book value, the going-concern value, the liquidation value, and the opinion of Bear Stearns. No detail as to the steps taken by Bear Stearns or the values calculated were provided. The Securities and Exchange Commission (SEC) instituted an action to determine if MPS had failed to comply with § 13(e) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(e), and Rule 13e-3 of the SEC, 17 C.F.R. 240.13e-3.

Rule of Law


Holding and Reasoning

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