## Facts

- Amway Asia Pacific Ltd. (AAP) had principal shareholders who collectively owned about 85% of AAP’s stock and discussed taking the company private.
- AAP’s board formed a committee to evaluate and negotiate a going-private transaction for the company and minority shareholders.
- On November 15, 1999, AAP and the principal shareholders announced a tender offer to buy the remaining minority shares for $18 per share.
- The same day, China publicly announced it would join the World Trade Organization, an event alleged to improve the value of companies with China-related business.
- AAP issued tender-offer materials on November 18, 1999; shareholders had until December 17, 1999 to tender and could revoke tenders during the offer period.
- Minority shareholder Robert Wardrop sued, alleging the $18 price was unfairly low because defendants did not account for China’s WTO entry and did not update or recalculate the offer price after the announcement.
- Wardrop asserted federal securities claims under Exchange Act §§ 10(b) and 14(e), alleging materially misleading omissions in connection with the tender offer.

## Issues

1. Whether failing to account for or disclose the valuation implications of China’s WTO entry in tender-offer materials states a claim under Exchange Act § 10(b) and Rule 10b-5.
2. Whether Exchange Act § 14(e) imposes a duty to update, recalculate, or reprice a tender offer based on post-announcement public macroeconomic or political developments.
3. Whether allegations that an offer price was too low, without identifying a concrete misleading statement or omission, can support federal tender-offer antifraud liability.

## Decision

- The court granted defendants’ dispositive motion at the pleading stage and dismissed the federal securities claims.
- The court held the complaint failed to plead actionable misstatements or omissions of material fact under § 10(b) or § 14(e).
- The court rejected the theory that federal securities law required defendants to reprice or update the tender offer in response to China’s WTO announcement.
- The court treated the alleged valuation effect of WTO accession as speculative and based on public information, insufficient to create an actionable disclosure duty.

## Legal Principles

- Federal tender-offer and antifraud provisions focus on whether disclosed statements are materially false or misleading; they do not require bidders to offer the best price or guarantee price fairness.
- An issuer and controlling shareholders generally have no continuing duty under § 10(b) or § 14(e) to reprice a tender offer solely because later public events may affect valuation, absent a prior statement rendered misleading.
- Public macroeconomic or political developments, and uncertain effects on issuer value, typically do not constitute undisclosed material facts that must be disclosed as “inside” information.
- A § 10(b) claim requires identification of a materially misleading statement or omission tied to a disclosure duty; generalized disagreement with valuation or deal price is insufficient.
- Reliance and causation principles require allegations connecting the challenged misstatement or omission to the shareholder’s tender decision.

## Conclusion

The court dismissed the shareholder’s § 10(b) and § 14(e) challenge to a going-private tender offer, holding that public WTO-related news and speculative valuation effects did not create a federal duty to update disclosures or reprice the offer absent a specific materially misleading statement or omission.


Wardrop v. Amway Asia Pac. Ltd., No. 99 Civ. 12093 (DC), 2001 WL 274067 (S.D.N.Y. Mar. 20, 2001)