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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE TO/A
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 9)
Taubman Centers, Inc.
(Name of Subject Company (Issuer))
Simon Property Acquisitions, Inc.
Simon Property Group, Inc.
Westfield America, Inc.
(Names of Filing Persons (Offerors))
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
876664103
(CUSIP Number of Class of Securities)
James M. Barkley, Esq. Peter R. Schwartz, Esq.
Simon Property Group, Inc. Westfield America Inc.
National City Center 11601 Wilshire Boulevard
115 West Washington Street 12th Floor
Suite 15 East Los Angeles, CA 90025
Indianapolis, IN 46024 Telephone: (310) 445-2427
Telephone: (317) 636-1600
(Name, Address and Telephone Numbers of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)
-----------------------------------------------
Copies to:
Steven A. Seidman, Esq. Scott V. Simpson, Esq.
Robert B. Stebbins, Esq. Skadden, Arps, Slate, Meagher & Flom LLP
Willkie Farr & Gallagher One Canada Square
787 Seventh Avenue Canary Wharf
New York, New York 10019 London, E14 5DS, England
Telephone: (212) 728-8000 Telephone: (44) 20 7519 7000
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CALCULATION OF
FILING FEE
================================================================================
Transaction Valuation* Amount of Filing Fee**
- --------------------------------------------------------------------------------
$1,243,725,540 $248,745.11
================================================================================
* Estimated for purposes of calculating the amount of the filing fee only.
Calculated by multiplying $20.00, the per share tender offer price, by
62,186,277 shares of Common Stock, consisting of (i) 52,207,756 outstanding
shares of Common Stock, (ii) 2,269 shares of Common Stock issuable upon
conversion of 31,767,066 outstanding shares of Series B Non-Participating
Convertible Preferred Stock, (iii) 7,097,979 shares of Common Stock issuable
upon conversion of outstanding partnership units of The Taubman Realty
Group, Limited Partnership ("TRG") and (iv) 2,878,273 shares of Common Stock
issuable upon conversion of outstanding options (each of which entitles the
holder thereof to purchase one partnership unit of TRG which, in turn, is
convertible into one share of Common Stock), based on the Registrant's
Preliminary Proxy Statement on Schedule 14A filed on December 20, 2002, the
Registrant's Schedule 14D-9 filed on December 11, 2002 and the Registrant's
Quarterly Report on Form 10-Q for the period ended September 30, 2002.
** The amount of the filing fee calculated in accordance with Regulation
240.0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50th
of one percent of the value of the transaction.
[X] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid $248,745.11 Filing Party: Simon Property Group, Inc.; Simon Property
Form or Registration Schedule TO (File No. 005-42862), Acquisition, Inc.; Westfield America, Inc.
No. Amendment No. 1 to the Schedule TO Date Field December 5, 2002, December 16, 2002 and
and Amendment No. 5 to the January 15, 2002
Schedule TO
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
[ ] Check the appropriate boxes below to designate any transactions to which
the statement relates.
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment
reporting the results of the tender offer: [ ]
==============================================================================
SCHEDULE TO
This Amendment No. 9 amends and supplements the Tender Offer Statement
on Schedule TO originally filed with the Securities and Exchange Commission (the
"Commission") on December 5, 2002, as amended and supplemented by Amendment No.
1 thereto filed with the Commission on December 16, 2002, by Amendment No. 2
thereto filed with the Commission on December 27, 2002, by Amendment No. 3
thereto filed with the Commission on December 30, 2002, by Amendment No. 4
thereto filed with the Commission on December 31, 2002, by Amendment No. 5
thereto filed with the Commission on January 15, 2003, by Amendment No. 6
thereto filed with the Commission on January 15, 2003, by Amendment No. 7
thereto filed with the Commission January 16, 2003 and by Amendment No. 8
thereto filed with the Commission on January 22, 2002 (as amended and
supplemented, the "Schedule TO") relating to the offer by Simon Property
Acquisitions, Inc., a Delaware corporation (the "Purchaser") and wholly owned
subsidiary of Simon Property Group, Inc., a Delaware corporation ("SPG Inc."),
to purchase all of the outstanding shares of common stock, par value $.01 per
share (the "Shares"), of Taubman Centers, Inc. (the "Company") at a purchase
price of $20.00 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated December 5, 2002 (the "Offer to Purchase"), and the Supplement to the
Offer to Purchase, dated January 15, 2003 (the "Supplement"), and in the related
revised Letter of Transmittal (which, together with any supplements or
amendments, collectively constitute the "Offer"). This Amendment No. 9 to the
Schedule TO is being filed on behalf of the Purchaser, SPG Inc. and Westfield
America, Inc. ("WEA").
Capitalized terms used and not defined herein shall have the meanings
assigned to such terms in the Offer to Purchase, the Supplement and the Schedule
TO, as applicable.
The item numbers and responses thereto below are in accordance with
the requirements of Schedule TO.
Item 11. ADDITIONAL INFORMATION.
On January 22, 2003, the United States District Court for the Eastern
District of Michigan (the "Court") issued an opinion and order (the "Order")
denying in part, and granting in part, the motion of the Company and the other
defendants to dismiss Count I of the Complaint filed by SPG Inc. and the
Purchaser in the Court on December 5, 2002 (the "Complaint"). In the Order, the
Court held that the issuance of the Series B Preferred Stock by the Company to
the Taubman family was not a "control share acquisition" under the Michigan
Control Share Acquisition Act (the "Act"). However, the Court also ruled that
the Taubman family's purported blocking position may be challenged by SPG Inc.
at a hearing on March 21, 2003 on the grounds that the family's "group" voting
power was obtained without shareholder approval under the Act. The Court held
that SPG Inc. had pled sufficient facts from which it could infer that Robert
Taubman and the Taubman family had acted in concert with other shareholders of
the Company to acquire 33.6% of the voting power in the Company, and that such
an acquisition could constitute a "control share acquisition" under the Act.
Therefore, the Court denied the Company's motion to dismiss SPG Inc.'s claim
that Robert Taubman, the Taubman Family and those persons who entered into
Voting Agreements with Robert Taubman constituted a group and that their
aggregation of shares was a "control share acquisition." At the March 21
hearing, SPG Inc. will also be allowed to press its claim that the Taubman
family's Series B Preferred Stock was improperly acquired in breach of fiduciary
duties owed to the Company's public shareholders.
Following the Court's ruling, the entire 33.6% voting control the
family purports to wield is subject to being legally invalidated.
The Court did not address the substance of the remaining claims of the
Complaint, including claims that issuance of the Series B Preferred Stock, and
use of the Series B Preferred Stock to thwart SPG's tender offer, constitutes a
breach of the fiduciary duties of the Company's board of directors and the
Taubman family. The Court has scheduled a hearing on that motion for March 21,
2003.
Item 12. EXHIBITS.
(a)(5)(O) Opinion and Order issued on January 22, 2003 by the United States
District Court for the Eastern District of Michigan in the matter
of Simon Property Group, Inc. and Simon Property Acquisitions,
Inc. v. Taubman Centers, Inc., A. Alfred Taubman, Robert S.
Taubman, Lisa A. Payne, Graham T. Allison, Peter Karmanos, Jr.,
William S. Taubman, Allan J. Bloostein, Jerome A. Chazen and S.
Parker Gilbert.
(a)(5)(P) Press Release issued by Simon Property Group, Inc., dated January
22, 2003.
SIGNATURE
After due inquiry and to the best of their knowledge and belief, the
undersigned hereby certify as of January 23, 2003 that the information set forth
in this statement is true, complete and correct.
SIMON PROPERTY GROUP, INC.
By:/s/ James M. Barkley
------------------------------------
Name: James M. Barkley
Title: Secretary and General Counsel
SIMON PROPERTY ACQUISITIONS, INC.
By:/s/ James M. Barkley
------------------------------------
Name: James M. Barkley
Title: Secretary and Treasurer
After due inquiry and to the best of their knowledge and belief, the
undersigned hereby certifies as of January 23, 2003 that the information set
forth in this statement is true, complete and correct.
WESTFIELD AMERICA, INC.
By:/s/ Peter R. Schwartz
--------------------------------
Name: Peter R. Schwartz
Title: Senior Executive Vice President
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- --------------------------------------------------------
(a)(5)(O) Opinion and Order issued on January 22, 2003 by the
United States District Court for the Eastern District of
Michigan in the matter of Simon Property Group, Inc. and
Simon Property Acquisitions, Inc. v. Taubman Centers,
Inc., A. Alfred Taubman, Robert S. Taubman, Lisa A.
Payne, Graham T. Allison, Peter Karmanos, Jr., William S.
Taubman, Allan J. Bloostein, Jerome A. Chazen and S.
Parker Gilbert.
(a)(5)(P) Press Release issued by Simon Property Group, Inc., dated
January 22, 2003.
EXHIBIT (a)(5)(O)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
--------------------------------------
SIMON PROPERTY GROUP, INC., AND SIMON PROPERTY
ACQUISITIONS, INC.,
PLAINTIFF(S), CASE NUMBER: 02-74799
HONORABLE VICTORIA A. ROBERTS
v.
TAUBMAN CENTERS, INC., A. ALFRED TAUBMAN, ROBERT S.
TAUBMAN, LISA A. PAYNE, GRAHAM T. ALLISON, PETER KARMANOS,
JR., WILLIAM S. TAUBMAN, ALLAN J. BLOOSTEIN, JEROME A.
CHAZEN, AND S. PARKER GILBERT,
DEFENDANT(S).
- ------------------------------------------------------------
ORDER
I. INTRODUCTION
This matter is before the Court on Defendants' Motion to Dismiss for
Failure to State a Claim Upon Which Relief can be Granted under the Control
Share Acquisition Act. Defendants request dismissal of Count I of Plaintiffs'
five-count complaint. In Count 1, Plaintiffs seek a declaration that certain
stock acquired by Defendants does not have voting rights and request injunctive
relief to prohibit Defendants from voting this stock.(1)
For the reasons stated below, the Court GRANTS in part and DENIES in part,
Defendants' Motion.
- ---------------
1 Plaintiffs amended their complaint after Defendants' motion was filed.
Defendants have not supplemented their motion in light of the amendments.
The remaining counts are as follows: Count II seeks a declaration that
certain stock acquired by Defendants does not have any voting rights and
requests injunctive relief to prohibit Defendants from voting the stock;
Count III seeks a declaration that Defendant may not vote certain stock
such that it would foreclose Plaintiffs' tender offer and disenfranchise
the public shareholders and that the Meeting Delay Amendment be deemed
null and void; Counts IV and V allege a breach of fiduciary duty by
certain Defendants.
II. BACKGROUND
Plaintiffs Simon Property Group, Inc and Simon Property Acquisitions, Inc.
filed this action against Taubman Centers, Inc. (TCI), A. Alfred Taubman and
members of the TCI Board of Directors - Robert Taubman, Lisa Payne, Graham
Allison, Peter Karmanos, Jr., William Taubman, Allan J. Bloostein, Jerome Chazen
and S. Parker Gilbert (hereinafter collectively referred to as "the Board").
TCI is a publicly traded real estate investment trust. TCI's sole asset is
a partnership interest in the Taubman Realty Group Limited Partnership (TRG), a
real estate company. Other partners of TRG include A. Alfred Taubman (via the A.
Alfred Taubman Revocable Trust and other entities), Robert Taubman, William
Taubman and other Taubman family members (collectively, the "Taubman Family") as
well as other investors. TCI conducts its operations through TRG, which manages
TCI's properties and business affairs.
In 1998, TCI announced that it had acquired former TRG partner General
Motors Pension Trusts' partnership interest in TRG and, thereby, obtained a
controlling interest in TRG. Subsequently, the TCI Board of Directors issued a
new series of voting preferred stock called the "Series B Preferred Stock"
(Series B) to limited partners of TRG, including the Taubman Family.(2) As a
/result, the Taubman Family acquired voting rights equal to a 30% ownership
interest in TRG, which increased their voting power in TCI by the same
amount.(3) Plaintiffs contend that this was acquisition of a "control share"
which by statute, required a resolution of all disinterested shareholders to
give those shares voting rights. MCL 450.1790.(4)
- ---------------
2 The limited partners received one share of the Series B stock for each TRG
unit held by the partners.
3 Plaintiffs assert that the Taubman Family only has an economic interest of
1% in contrast to their now 30% voting interest. Prior to the issuance of
Series B Stock, Plaintiffs state that the Taubman Family only had a 1%
voting interest. Currently, TCI has an approximate (voting) interest of
62%, and 8% is owned by other investors.
4 The Michigan Control Share Acquisition Act defines "control shares" as:
[S]hares that, except for this chapter, would have voting power with
respect to shares of an issuing public corporation that, when added to
all other shares of the Issuing public corporation owned by a person or
in respect to which that person may exercise or direct the exercise of
voting power, would entitle that person, immediately after acquisition
of the shares, directly or indirectly, alone or as part of a group, to
exercise or direct the exercise of the voting power of the issuing
public corporation in the election of directors within any of the
following ranges of voting power:
(a) 1/5 or more but less than 1/3 of all voting power.
(b) 1/3 or more but loss than a majority of all voting power.
(c) A majority of all voting power.
MCL 450.1790(2).
-2-
Neither TCI nor the Taubman Family ever sought or obtained a resolution of the
shareholders approving voting rights for the Series B stock.
In October 2002, Robert Taubman rejected two offers from Plaintiffs to
purchase the outstanding common stock of TCI. On November 13, 2002, Plaintiffs
publicly disclosed these offers and, on the same day, the Board announced its
earlier decision to reject the offers. On December 6, 2002, Plaintiffs commenced
a tender offer(5) for all outstanding common stock of TCI, which the Board again
rejected and recommended that the shareholders also reject.
Plaintiffs contend that the Taubman Family's position is depriving public
shareholders of the economic benefits of their premium offer by precluding
Plaintiffs from even presenting their tender offer to shareholders. The current
Articles of Incorporation prohibit any outside party from acquiring more than
9.9% of TCI's voting power (the "Excess Share Provision"). Therefore, in order
for Plaintiffs to make their offer, this provision must be modified or
eliminated. However, a two-thirds shareholder vote is required to do so.
The Taubman Family's opposition has resulted in its alliance with other
stockholders to block any sale of TCI by acquiring greater than 1/3rd voting
power, Robert Taubman and the Taubman Family have rallied to obtain 33.6% of the
voting power of TCI. Taubman Family members exercised stock options and Robert
Taubman solicited voting agreements from other shareholders to grant him the
sole and absolute right to vote their shares of common and Series B stock, by
irrevocable proxy, for the admitted purpose of preventing an unsolicited
takeover of the company.(6) Consequently, Robert Taubman and the Taubman Family
now have the power to defeat any sale or extraordinary transaction which would
require a two-thirds vote.
Plaintiffs bring this action alleging, among other things, that the Taubman
Family's 1998 acquisition of Series B stock was a "control share acquisition" as
defined by Chapter 7B of the Michigan Business Corporation Act, MCL 450.1790,(7)
et seq (commonly referred to as the "Control Share Acquisition Act," hereinafter
the "Control Share Act" or "Act"). Under the Act, unless a company's articles of
incorporation or bylaws state that the Act does not apply, "control shares"
acquired in a "control share acquisition"(8) only have voting
- -------------
5 A tender offer is a device by which one corporation seeks to acquire
control of another by offering to buy a substantial portion of its shares
tendered for sale at a stipulated price. 6A Fletcher Cyclopedia of
Private Corp.ss. 2841.10.
6 See Schedule 13D filed by Robert Taubman with the Securities and Exchange
Commission (SEC), attached as Pl Exh A, dated November 14, 2002.
7 Chapter 7B of the Michigan Business Corporation Act is officially known as
the "Stacey, Bennett, and Randall shareholder equity act." MCL 450.1970(1).
8 The Act defines a "control share acquisition" as "the acquisition,
directly or indirectly, by any person of ownership of, or the power to
direct the exercise of voting power with respect to, issued and
outstanding control shares." MCL 450.1791(1).
-3-
rights that are conferred by a resolution approved by a majority of the
shareholders entitled to vote (excluding the acquiring person).
MCL ss.ss.450.1794, 450.1798.
Because the issuance of Series B stock was never submitted to a shareholder
vote, Plaintiffs contend that, under the Act, the Series B stock does not have
any voting rights. Plaintiffs, alternatively, argue that Robert Taubman and the
Taubman Family's recent acquisition of a controlling block of shares was
accomplished via the formation of a group and that the shares so acquired also
constitute a "control share acquisition" that is subject to a shareholder vote.
Defendants, however, assert that the Series B transaction was not a control
share acquisition and, therefore, did not require a shareholder vote to confer
voting rights. Defendants also deny that Robert Taubman and the Taubman Family's
accumulation of shares constitutes a group or a "control share acquisition"
within the meaning of the Act.
If Plaintiffs are correct on either theory, the Taubman Family would no
longer have a controlling number of votes (unless a shareholder vote conferred
voting rights) and would no longer be an obstacle to Plaintiffs' efforts to gain
control of TCI.
III. STANDARD OF REVIEW
Defendant brings this motion pursuant to Fed. R. Civ. P. 12(b)(6). When
reviewing a Rule 12(b)(6) Motion, the trial court "must construe the complaint
liberally in the plaintiff's favor and accept as true all factual allegations
and permissible inferences therein." Gazette v. City of Pontiac, 41 F.3d 1061,
1064 (6th Cir. 1994); see also Miller v. Currie, 50 F.3d 373, 377 (6th Cir.
1995). Because a Rule 12(b)(6) motion rests upon the pleadings rather than the
evidence, "[i]t is not the function of the court [in ruling on such a motion] to
weigh evidence or evaluate the credibility of the witnesses." Miller, 50 F.3d at
377. The court should deny a Rule 12(b)(6) motion "unless it appears beyond
doubt that the plaintiff can prove no set of facts in support of [the] claim
which would entitle [the plaintiff] to relief." Gazette, 41 F.3d at 1064,
quoting Conley v. Gibson, 355 US 41, 45-46 (1957); see also Miller, 50 F.3d at
377; Vemco, Inc. v. Camardella, 23 F.3d 129, 132 (6th Cir. 1994). While this
standard is decidedly liberal, it requires more than the bare assertion of legal
conclusions. In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir. 1993).
Rather, the complaint must contain either direct or inferential
-4-
allegations respecting all the material elements to sustain a recovery under
some viable legal theory. DeLorean, 991 F.2d at 1240.
IV. ANALYSIS
Chapter 7B of the Michigan Business Corporation Act, MCL 450.1790, et seq
(commonly referred to as the "Control Share Acquisition Act") has been defined
as an anti-takeover statute which "regulates the accumulation of significant
voting power in Michigan corporations by acquirers." Atlantis Group, Inc v.
Alizac Partners, No. 1:90-CV-937, 1001 US Dist Lexis 12106 at *10 (WD Mich Aug
27, 1991). Shares acquired by an individual or group that results in voting
power that falls within any one of three ranges are called "control shares":
(2) As used in this chapter, "control shares" means shares that .
. . would have voting power with respect to shares of an issuing
public corporation that, when added to all other shares of the
issuing public corporation owned by a person or in respect to
which that person may exercise or direct the exercise of voting
power, would entitle that person, immediately after acquisition
of the shares, directly or indirectly, alone or as part of a
group, to exercise or direct the exercise of the voting power of
the issuing public corporation In the election of directors
within any of the following ranges of voting power:
(a) 1/5 or more but less than 1/3 of all voting power.
(b) 1/3 or more but less than a majority of all voting power.
(c) A majority of all voting power.
MCL 450.1790(2). Such transactions are called "control share acquisitions" which
are defined as "the acquisition, directly or indirectly, by any person of
ownership of, or the power to direct the exercise of voting power with respect
to, issued and outstanding control shares." MCL 450.1791(1). A person or group
is not entitled to vote "control shares" unless subsequently empowered to do so
by a majority vote of remaining disinterested shareholders. MCL 450.1798,
450.1794.
In this case, the parties raise two issues: 1) whether the Series B stock
issued by the TCI Board in 1998 to the Taubman Family was a "control share
acquisition," and 2) whether an acquisition of shares which gave Robert Taubman
and the Taubman Family, collectively, 33.6% of the voting power in TCI/TRG, was
a "group" acquisition governed by the "control share acquisition" statute.
Defendants make a persuasive argument in favor of the Court adopting
Indiana's interpretation of the language at issue. However, Plaintiffs have pled
sufficient facts from which the Court could infer that Robert Taubman and
-5-
the Taubman Family acted in concert with many other shareholders to acquire a
33.6% controlling block of shares which constituted a "control share
acquisition."
A. SERIES B STOCK
Michigan's general principals of statutory construction are well settled.
Statutory interpretation is a question of law, Robertson v DaimlerChrysler Corp,
465 Mich 732, 739 (2002). A court must first look to the specific language of
the statute. Title Office, Inc v Van Buren County Treasurer, 249 Mich App 322,
330 (2002). A court's obligation is to "ascertain the legislative intent that
may reasonably be inferred from the words expressed in the statute." Koontz v
Ameritech Services, Inc, 466 Mich 304, 312 (2002). "[S]tatutory words must
[also] be considered in light of the general purpose sought to be accomplished."
People v. Smith, 423 Mich 427, 441 (1985). "The legislature is presumed to have
intended the meaning it plainly expressed" and, if the language is unambiguous,
a court is not at liberty to look outside the statute to further construe the
same. Title Office, 249 Mich App at 330; Koontz, 466 Mich at 312; Pohutski v
City of Allen Park, 485 Mich 675, 683 (2002). A court must presume that "every
word has some meaning and . . . avoid any construction that would render any
part of a statute surplusage or nugatory," Title Office, 249 Mich App at
330-331. "As for as possible, effect should be given to every phrase, clause and
word." Id at 331. Undefined terms should be given their "plain and ordinary
meanings," which may be determined by dictionary definitions. Koontz, 400 Mich
at 312.
There are few Michigan cases interpreting Michigan's Control Share
Acquisition Act, generally, and none interpreting the language at issue in this
case. At issue in this case is the Act's definition of a "control share
acquisition," in the context of the phrase "issued and outstanding." Defendants
contend that this phrase only applies to shares already issued to and/or held by
shareholders. Defendants urge the Court to find that newly issued shares
directly from the corporation, such as the Series B shares issued here, are
exempted because such shares were not previously issued to, or held by,
shareholders.
There is support for Defendants' interpretation. Indiana's Official
Comments state:
Because "control share acquisition" is defined as the acquisition
of already "issued and outstanding" control shares, a person's
acquisition from the corporation itself of shares that were
previously not issued or outstanding (such as newly authorized
shares, or treasury shares being reissued) will not constitute a
"control share acquisition," even if the acquisition puts that
person over one of the [Ind Code ss.] 23-1-42-1's three
thresholds of voting power. However, that person's
-6-
acquisition of the same number of shares in a public offering
(rather than directly from the corporation) would constitute a
"control share acquisition," since the shares will already have
been "issued" (to an underwriter) before being acquired by that
person.
Ind Code ss.23-1-42-2, Official Comments. The Indiana Supreme Court in Young v
General Acceptance Corp, 770 NE 2d 298, 301 (Ind 2002), also recently upheld a
lower court's underlying finding that newly issued shares (which were not part
of the common stock that was issued and outstanding) were not subject to the
control share statute.
Based solely upon the affidavit of one of the attorneys who drafted the Act
and presented it to the Legislature, Plaintiffs dispute whether Michigan
intended that the exemption proposed by Defendants be read into the statute and
whether Michigan actually adopted the language of the Indiana statute and the
official comments. Plaintiffs' argument is unpersuasive and is directly contrary
to Michigan law.
Michigan courts have rejected post-enactment statements of members of the
legislature regarding their intentions in enacting a bill as evidence to be used
in interpreting a statute. Board of Education of Presque Isle Township School
District No. 8 v Presque Isle County Board of Education, 364 Mich 605, 612
(1961); Michigan United Conservation Clubs v National Trappers Assoc, 949 F2d
202, 209 (6th Cir 1991). The statements of an attorney whose participation was
limited to drafting the language for consideration by members of the legislature
is, likewise, rejected.
Michigan courts have, however, relied upon the Official Comments to
Indiana's analogous statutes for guidance in interpreting the Michigan Act. See
Atlantis Group, Inc v Alizac Partners, No. 1:90-CV-937, 1991 US Dist Lexis 12106
at *19 (WD Mich Aug 27, 1991); Heenan v Page, No. 90-020150-CZ, unpub. slip op
at 9 (Wayne County Circuit Sept 6, 1991); Atlantis Group, Inc v Alizac Partners,
No. 1:90-CV-937, unpub. slip op. at 10 n.6 (WD Mich Dec 5, 1991). The Control
Share Act was modeled after the Indiana statute and adopts that language
virtually in its entirety.
Where the Michigan legislature adopted the statutory language of New York
in enacting a Michigan statute, the Michigan Supreme Court stated that "[b]y
borrowing New York's statute in its entirety, the Legislature indicated that it
was motivated by the same purpose that underlay the New York statute." People v
Stoudemire, 429 Mich 262, 271 (1987). The Court further stated that it is
appropriate for a court "to infer legislative intent from the purpose of similar
statutes." Id at 272. Therefore, under Stoudemire, it is appropriate for this
Court to infer that it was the Michigan Legislature's intent to adopt the
language of the analogous control share statutes and the stated underlying
purpose and intent of the Indiana legislature.
-7-
The Court is not persuaded by the holding in Business Aviation of South
Dakota, Inc v Medivest, Inc, 882 P2d 662 (UT 1994), relied upon by Plaintiffs.
In Business Aviation, defendants argued that the phrase "issued and outstanding"
did not include newly issued shares. 882 P2d at 665. Interpreting language
identical to Michigan's definition of a "control share acquisition," the court
declined to read such an exclusion into the Utah Act, reasoning that it would
"improperly allow a board of directors to defeat any challenge to their control
of the corporation by giving its members controlling voting power in the form of
additional shares of stock whenever shareholders seek the election of a new
board of directors." Id.
The holding in Business Aviation cannot be reconciled with Indiana's
interpretation of the send language. Indiana has taken a contrary position and,
as stated above, it is reasonable for this Court to infer that Michigan has
adopted Indiana's interpretation. Moreover, it is significant to note that,
within one year of the Utah Supreme Court's ruling in Business Aviation, the
Utah legislature amended its statute to provide that an acquisition of shares,
"pursuant to a direct issue by or transfer from the issuing public corporation
of its own shares," does not constitute a control share acquisition." Utah Code
ss.61-8-3(4)(e).
In light of Indiana's Official Comments as to the meaning of the phrase
"issued and outstanding," the Court finds that the issuance of Series B stock to
Defendants in 1998 was not a "control share acquisition" within the meaning of
the Michigan Control Share Acquisition Act,
B. PLAINTIFFS' GROUP THEORY
Plaintiffs argue that even if the statute is to be interpreted as
Defendants claim, Robert Taubman and the Taubman Family's recent acquisition of
a 33.6% controlling block of shares constitutes a "control share acquisition"
because of the recent formation of a group by Robert Taubman and the Taubman
Family with respect to the voting of the Series B and other shares. An
interpretation of the "issued and outstanding" language is not necessary, says
Plaintiffs, because it is undisputed that all of the shares at issue were
"issued and outstanding" at the time the group was formed.
Defendants deny that Robert Taubman's recent acquisition of shares was
accomplished via a group. Defendants assert that the Schedule 13D filed by
Robert Taubman and others with the Securities and Exchange Commission (SEC) does
not refer to an acquisition by Robert Taubman or that he has a right to vote any
of the Taubman Family's Interest. Rather, each member of the Taubman Family
specifically disclaims beneficial ownership of any shares of common stock,
Series B stock and units hold by any other member of the Taubman Family. Pl Exh
A, Item 4. Citing Atlantis Group, Inc v Alizac Partners, No. 1:90-CV-937, slip
-8-
op. at 10 (WD Mich Dec 5, 1991), Defendants argue that the Taubman Family's
disclosure of their intention to vote consistently is not the same as an
acquisition under the Act. Moreover, even if the 13D stated that Robert Taubman
was entitled to vote all of the Taubman Family's interests, Defendants contend
that such an acquisition would not be a "control share acquisition" because the
Act expressly excluded from thedefinition of such an acquisition those shares
obtained "by gift . . . or otherwise without consideration." MCL 450.1791(4)(c).
Neither the Michigan Act nor the Indiana statute expressly defines "group."
However, the Official Comments to Indiana's statute regarding the definition of
"control share acquisition" states:
As noted in the Official Comment to [Ind Code ss.] 23-1-42-1, the
key is not simply whether a single person acquires actual record
ownership of a sufficient percentage of shares with voting power
in the election of directors: Any transaction or codes of
transactions under which a person, or a group of persons acting
together, acquires the substantive practical ability to vote or
direct the exercise of voting power within the ranges specified
in [Ind Code ss.]23-142-1 - directly or indirectly, individually
or collectively - will constitute a "control share acquisition"
under the Chapter, whatever the form of the transactions or the
formal ownership of the shares.
Ind Codess.23-1-42-2, Official Comments. Likewise, the Comments to Indiana's
statute regarding the definition of "control shares" states that:
[T]he legal form of the acquisition, or whether the acquisition
is made by one person or by two or more persons acting
cooperatively or in concert, will not affect application of the
Chapter.
Ind Code ss.23-1-42-1, Official Comments. The Comment further states that such
an approach is similar to that adopted in Section 13(d) of the Securities and
Exchange Act (SEA), 15 USC ss.78 et seq. Id; See also Atlantis, 1991 US Dist
Lexis 12106 at *19 (relying upon Indiana Official Comments to ss.23-1-42-1 to
determine existence of group).
Under Section 13(d), "a court evaluating an allegation of the existence of
a group must `determine whether there is sufficient direct or circumstantial
evidence to support the inference of a formal or informal understanding between
[the defendants]' for the purpose of acquiring, holding, or disposing of
securities." Hallwood Realty Partners v Gotham Partners, LP, 286 F3d 613, 617
(2002), quoting Wellman v Dickinson, 682 F.2d 355, 363 (2d Cir 1982); See also
Morales v Quintel Entertainment, Inc, 249 F3d 115, 124 (2nd Cir 2001).
One indicator of the existence of a group is "representations and
insinuations to third parties by members of the group that the members together
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'control' a block of shares, even though those shares are on the record of the
company as owned by individual group members." Breaud v Amato, 667 So2d 1337,
1343 (5th Cir 1995). Another indicator is "action taken by the group to affect
the corporate direction of the company." Id at 1344.
The Court finds that Plaintiffs have pled sufficient facts to survive this
part of Defendants' Motion to Dismiss, facts from which this Court could infer
that Robert Taubman, the Taubman Family and the shareholders who gave Robert
Taubman the "sole and absolute right" to vote their shares, via Voting
Agreements, constituted a group and, therefore, the collective shares
constituted a "control share acquisition" subject to the Control Share Act.
Plaintiffs pled that the Taubman Family exercised options and that several
Taubman family friends made purchases and subsequently transferred voting power
of those shares to Robert Taubman. First Amended Complaint, P. 29. Plaintiffs
also allege that Robert Taubman entered into Voting Agreements with various
shareholders, which gave him and the Taubman Family a 33.6% controlling block,
for the purpose of preventing a takeover of the company. Id at P. 30. Per
Plaintiffs, this series of transactions constitutes the formation of a group and
the accumulation of shares constitute a "control share acquisition." Id at P. P.
31, 67
In support of these assertions, Plaintiffs' Complaint refers to and quotes
from the Schedule 13D filed by Robert Taubman and various other signatories with
the SEC on November 14, 2002. In a section entitled "Purpose of the
Transaction," the Schedule 13D states:
Certain of the Reporting Persons have executed the Voting
Agreements described in Item 5, granting the sale and absolute
right to vote their shares on any and all matters that come
before the shareholders of the Company to Robert S. Taubman . . .
. Robert S. Taubman together with the Taubman Family controls
33.6% of the vote of the capital stock of the Company . . . . The
Reporting Persons have entered into the Voting Agreements for the
purposes of preventing an unsolicited takeover of the Company.
Pl Exh A, Item 4.
Plaintiffs' allegations, which must be presumed true, along with the
statements in the Schedule 13D, are sufficient to satisfy Plaintiffs' burden.(9)
Plaintiffs have alleged and Defendants' own statements indicate that Robert
Taubman entered into the Voting Agreements that, with his own holdings and those
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9 Documents attached to a motion to dismiss are considered part of the
pleadings if they are referred to-in the plaintiffs complaint and are
central to the plaintiff's claim. Niemen v NLO, Inc, 108 F3d 1546, 1555
(6th Cir 1097), quoting Venture Assocs Corp v Zenith Data Sys Corp, 987
F2d 429, 431 (7th Cir. 1993). Therefore, the Court's consideration of the
Schedule 13D is appropriate in this 12(b)(6) motion.
-10-
of the Taubman Family, gave Robert Taubman and the Taubman Family a controlling
block of shares over one of the threshold amounts set forth in MCL 450.1790(2).
The express purpose of giving voting power to Robert Taubman, as stated in the
Schedule 13D, was to prevent a takeover by Plaintiffs. The statements in the
Schedule 13D will only be one factor for the Court (or trier of fact) to
consider in ultimately deciding the issue. At this stage, however, Plaintiffs'
allegations and the Schedule 13D are sufficient to create an inference that the
parties were acting together to empower Robert Taubman and the Taubman Family
with a controlling block of shares.
Defendants claim that the shares acquired by Robert Taubman via the voting
agreements were merely "gifts" which are expressly excluded from the definition
of a control share acquisition, per MCL 450.1791(4)(c). This argument is belied
by the clear and unambiguous statement of the purpose of entering the agreements
that is set forth in the Schedule 13D.
Plaintiffs' Complaint includes allegations from which this Court could
infer that Robert Taubman, the Taubman Family and those persons who entered into
Voting Agreements with Robert Taubman constituted a group and that their
aggregation of shares was a "control share acquisition." Therefore, Defendants'
Motion to Dismiss in this regard, is denied.
V. CONCLUSION
The Michigan Control Share Acquisition Act does not pertain to a direct
issue from the corporation of its own shares. In this regard, Defendants' motion
is GRANTED.
However, the Court finds that Plaintiffs have sufficiently pled that a
group was formed and that the shares acquired by the group constituted a
"control share acquisition" within the meaning of the Michigan Control Share
Acquisition Act. In this regard, Defendants' motion is DENIED.
IT IS SO ORDERED.
/s/Victoria A. Roberts
-----------------------------
Victoria A. Roberts
United States District Judge
Dated: January 22, 2003
EXHIBIT (a)(5)(P)
[SIMON PROPERTY GROUP INC. LOGO]