## Facts

- ConAgra, Inc. (through subsidiary CAG Acquisition Corp.) and Tyson Foods, Inc. (through subsidiary Holly Acquisition Corp.) competed to acquire Holly Farms Corp., a publicly traded poultry company.
- On January 19–20, 1989, Tyson issued a press release stating or strongly implying it had “acquired” Holly Farms or reached a definitive acquisition agreement.
- At the time of Tyson’s release, negotiations were ongoing and no final binding acquisition agreement had been executed.
- Tyson’s announcement prompted heavy trading activity in Holly Farms stock and affected the takeover contest.
- On January 24, 1989, ConAgra issued a press release describing its merger proposal and asserting comparative value against Tyson’s proposal.
- Tyson contended ConAgra’s release overstated the value of ConAgra’s proposal and was designed to influence shareholder voting, making it an unlawful proxy solicitation not compliant with federal proxy rules.
- ConAgra argued its release was a public informational statement, did not request proxies, and preceded any scheduled shareholders’ meeting.
- ConAgra sued seeking injunctive relief under § 14(e); Tyson answered and counterclaimed alleging ConAgra violated § 14(a) and § 14(e), and both sides sought preliminary injunctions.

## Issues

1. Whether Tyson’s January 19–20 press release implying a completed acquisition or definitive agreement violated Exchange Act § 14(e) as a materially false or misleading statement in connection with a tender offer.
2. Whether ConAgra’s January 24 press release constituted a proxy solicitation subject to § 14(a) and SEC proxy rules, and whether it was materially misleading under § 14(e), warranting preliminary injunctive relief.

## Decision

- The court granted preliminary injunctive relief against both parties.
- The court found ConAgra showed a likelihood of success that Tyson’s press release violated § 14(e) by materially misleading the market about the existence of a definitive acquisition agreement.
- The court found Tyson showed a likelihood of success that ConAgra’s press release functioned as a proxy solicitation subject to § 14(a) and that it likely failed to comply with proxy-disclosure requirements, with potentially misleading statements about offer value.
- The injunctions were structured to prevent further dissemination of false or misleading statements and to require compliance with federal proxy rules for proxy-related communications.

## Legal Principles

- Exchange Act § 14(e) prohibits materially false or misleading statements or omissions in connection with tender offers; bidder press releases can fall within § 14(e).
- A statement implying a definitive acquisition agreement when none exists can be material because reasonable investors would view agreement status as important in trading and evaluating competing bids.
- For preliminary injunctive relief under § 14(e), evidence that a bidder knew no definitive agreement existed yet issued a “done deal” announcement can support an inference of scienter (at least reckless disregard).
- “Solicitation” under Exchange Act § 14(a) is construed broadly; communications reasonably calculated to influence shareholder voting may qualify even without an explicit proxy request and even before a meeting is scheduled.
- Proxy solicitations must comply with applicable SEC proxy rules (including required disclosures and dissemination practices); bypassing these requirements can justify injunctive relief.
- Williams Act and proxy-rule remedies are bidder-neutral and are aimed at protecting shareholders’ access to accurate and complete information during control contests.

## Conclusion

The court issued cross-preliminary injunctions in a takeover battle, concluding that Tyson likely violated § 14(e) by suggesting a definitive acquisition agreement that did not exist and that ConAgra likely engaged in an unlawful proxy solicitation under § 14(a) through a vote-influencing press release that did not satisfy proxy-rule requirements, with both injunctions directed to prevent further misleading communications and protect shareholders’ decision-making.


ConAgra, Inc. v. Tyson Foods, Inc., 708 F. Supp. 257 (D. Neb. 1989)