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Buffalo Forge Co. v. Abrams
Citations: 79 A.D.2d 140; 436 N.Y.S.2d 19; 1981 N.Y. App. Div. LEXIS 9678
Court: Appellate Division of the Supreme Court of the State of New York; February 19, 1981; New York; State Appellate Court
Ampco-Pittsburgh Corporation and its subsidiary, Ampco-Pittsburgh Securities II Corporation, submitted a registration statement to the New York Attorney-General on January 7, 1981, for a takeover bid of Buffalo Forge Company. Ampco, a Pennsylvania corporation established in 1929, and Ampco II, incorporated in Delaware in 1980, are controlled by Louis Berkman and the Louis Berkman Company, which together own 40% of Ampco's stock. Buffalo Forge challenged the Attorney-General's waiver of financial statement filings by Berkman and LBC, asserting they are 'offerors' under New York’s Security Takeover Disclosure Act. The court agreed with Buffalo Forge, finding that the Attorney-General exceeded his authority. While authorized to create regulations, the Attorney-General cannot waive the statutory requirement for financial statements as mandated by section 1603 of the Business Corporation Law. The decision emphasized that administrative agencies must adhere to legislative intent and cannot create rules that conflict with existing statutes. The Attorney-General is responsible for administering the State’s disclosure act, which complements federal filing regulations and serves distinct public purposes. The act mandates that individuals or corporations making tender offers for the purchase of New York State corporations disclose key information, including the identity of the offerors, funding sources, and plans regarding the acquired corporation’s assets and operations. Recent cases have highlighted that out-of-state corporations have made tender offers without providing adequate information to stockholders, potentially affecting their responses to such offers. The act emphasizes the importance of financial disclosures, and failure to comply undermines its intent. Consequently, injunctive relief is necessary to enforce compliance. The Supreme Court's February 5, 1981, order, which denied a temporary injunction, should be reversed, allowing for an injunction that compels the Louis Berkman Company and Louis Berkman to provide the required disclosures before Ampco-Pittsburgh Corporation and affiliated entities can proceed with their tender offer for Buffalo Forge Company. An "offeror" is defined as any person involved in making a takeover bid, excluding certain professionals providing advisory services without participating in the bid.