## Facts

- Martin Sosnoff (defendant) made a tender offer to purchase shares from Caesars World, Inc. (plaintiff) shareholders.
- Sosnoff planned to raise almost half of the needed financing through loans secured directly by Caesars World stock.
- Caesars World filed suit in federal district court seeking an injunction to block the tender offer.
- Based on the preliminary record, Caesars World asserted that Sosnoff intended to finance the remainder of the tender offer through debt instruments issued by MTS Holdings Company (MTS).
- Caesars World characterized MTS as a shell corporation that Sosnoff allegedly organized specifically to issue those debt instruments.
- The court evaluated the request for injunctive relief on preliminary evidence concerning the tender offer’s financing structure and what shareholders were being told about it.

## Issues

1. Whether, on the preliminary record, Caesars World showed a sufficient likelihood that Sosnoff’s tender-offer financing plan (including the alleged use of MTS as a shell issuer of debt) involved materially misleading or incomplete information such that injunctive relief was warranted.
2. Whether Caesars World satisfied the requirements for preliminary injunctive relief to stop the tender offer pending further proceedings.

## Decision

- The court granted preliminary injunctive relief halting the tender offer pending further proceedings.
- Based on preliminary evidence, the court found it likely that Caesars World could prove Sosnoff planned to finance the remainder of the tender offer with debt instruments issued by MTS, a shell corporation allegedly organized for that purpose.
- The court treated the tender-offer financing structure and the bidder’s true sources of funds as information significant to shareholders’ tender decision and concluded interim relief was appropriate to preserve the status quo while the claims were litigated.

## Legal Principles

- Preliminary injunctive relief may issue when the moving party shows a likelihood of success on the merits, irreparable harm absent relief, and that the balance of hardships and public interest favor an injunction.
- In the tender-offer setting, federal securities law focuses on whether shareholders receive full and non-misleading disclosure of material facts, including the bidder’s sources of funds and financing arrangements.
- Where preliminary evidence supports a claim that tender-offer financing depends on undisclosed or inaccurately described arrangements—such as debt issued through a thinly capitalized entity—courts may temporarily enjoin the offer to protect shareholders from making decisions on an incomplete or misleading record.

## Conclusion

In a dispute over Martin Sosnoff’s tender offer for Caesars World, the district court preliminarily stopped the offer after finding, on early evidence, that Caesars World was likely to prove Sosnoff intended to complete the financing through debt instruments issued by MTS Holdings Company, an alleged shell entity; because financing sources and structure can be material to shareholders, the court ordered interim relief to prevent shareholders from tendering while the adequacy and accuracy of the financing-related disclosures were resolved.


Caesars World, Inc. v. Sosnoff, 1987 LEXIS 14293 (1987)