Wardrop v. Amway Asia Pacific Ltd.

2001 WL 274067 (2001)

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Wardrop v. Amway Asia Pacific Ltd.

United States District Court for the Southern District of New York
2001 WL 274067 (2001)

KS

Facts

Robert Wardrop (plaintiff) was a former shareholder of Amway Asia Pacific Ltd. (AAP) (defendant), an entity with business ties in China. In 1998 the principal shareholders of AAP, who collectively owned 85 percent of AAP’s stock, began discussing taking the company private. In 1999, the AAP board created a committee to evaluate, negotiate and execute such a transaction. On November 15, 1999, AAP and its principal shareholders announced an offer to purchase at $18 per share the 15 percent of AAP shares they did not own. On the same day, it was announced that China, after 13 years of negotiations, would be joining the World Trade Organization (WTO). The announcement of China’s inclusion in the WTO increased the value of companies with business related to China. The offer to purchase was issued on November 18, 1999, and it allowed the shareholders one month—until December 17, 1999—to tender their shares or revoke a decision to tender their shares. Wardrop alleged violations of §§ 10(b) and 14(e) of the Securities Exchange Act of 1934 because APP and its principal shareholders had failed to consider the impact that China’s entry into the WTO would have in determining the fair price for the tender offer and had failed to recalculate the fair tender-offer price after the WTO agreement was reached.

Rule of Law

Issue

Holding and Reasoning (Chin, J.)

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