## Facts

- Johncamp Realty, Inc. commenced a cash tender offer for any and all shares of Prudent Real Estate Trust at $7 per share, a substantial premium over market price.
- The offer was not conditioned on a minimum number of shares tendered and was set to expire shortly after commencement unless extended.
- A stockholders’ agreement provided that Campeau-related entities would supply most financing, while Pacific-related entities would supply the remainder, and that Pacific would have exclusive voting control over acquired shares and significant post-acquisition operational authority.
- Additional agreements allocated responsibilities among affiliated parties; Wertin and JWDC guaranteed certain Pacific obligations tied to the financing and transaction structure.
- Johncamp filed a Schedule 14D-1 stating that financial statements of certain bidders were “not applicable” and attached financial information for Campeau, but provided no comparable financial information for Pacific, Wertin, JWDC, or related entities.
- Prudent sued under the Williams Act, alleging material omissions and misleading tender-offer disclosures, and sought temporary and preliminary injunctive relief.
- The district court denied injunctive relief; the court of appeals granted interim relief pending expedited appeal.

## Issues

1. Whether tender-offer disclosures were materially deficient under § 14(d) and SEC tender-offer rules because they omitted financial information about entities and individuals materially responsible for financing and post-acquisition control.
2. Whether the omissions rendered the tender-offer materials misleading in violation of § 14(e).
3. Whether the target established entitlement to preliminary injunctive relief halting the offer pending corrective disclosure.

## Decision

- The court of appeals reversed the denial of preliminary injunctive relief and remanded with instructions to issue an appropriate temporary injunction.
- It held the Schedule 14D-1 materially insufficient because it failed to disclose financial and control-related information concerning Pacific, Wertin, JWDC, and related entities that were integral to financing and would exercise effective control.
- It concluded the omissions constituted material omissions making the tender-offer disclosures misleading under § 14(e).
- It ruled that the target satisfied the circuit standard for preliminary relief at least by showing serious questions going to the merits and a balance of hardships favoring an injunction to preserve informed shareholder choice.

## Legal Principles

- Williams Act tender-offer disclosures must provide shareholders information material to an informed tender decision, including material facts about those who finance the offer or will exercise effective control after acquisition.
- Schedule 14D-1 financial disclosure requirements are assessed by the transaction’s practical allocation of financing and control, not merely by formal labels attached to the nominal bidder.
- An omission of material information in tender-offer materials can violate § 14(e) when it makes affirmative statements or the overall presentation misleading.
- Preliminary injunctive relief is appropriate where tender-offer disclosure violations present serious merits questions and shareholders otherwise face an imminent decision based on incomplete information.

## Conclusion

The Second Circuit required temporary injunctive relief to stop the tender offer until disclosures were corrected, holding that shareholders were entitled to material financial and control information about the financing and controlling participants, not only the nominal bidder.


Prudent Real Estate Tr. v. Johncamp Realty, Inc., 599 F.2d 1140 (2d Cir. 1979)