On July 14, 1999, U.S. District Judge Nora M. Manella issued an Order granting defendants’ motion to dismiss the action. Judge Manella stated that at the hearing on the motion, plaintiffs’ counsel was unable to articulate what additional facts plaintiffs could allege to cure the deficiencies in the FAC. The action was dismissed with prejudice and the case closed.
The original complaint alleges that on or about May 4, 1998, Union Texas publicly
announced that it had entered into an Agreement and Plan of Merger (the "Merger
Agreement") whereby ARCO would purchase all of the Company's outstanding common stock for $29.00 per share. In addition, Union Texas announced that Kravis
Kohlberg & Roberts & Co. ("KKR"), its 25.6% shareholder, had agreed to tender
its shares for the $29.00 offering price pursuant to its effort to liquidate
its investment in Union Texas.
Further, the complaint alleges that on or about May 8, 1998, VWK filed a
Schedule 14D-1 and Offer to Purchase and commenced, on behalf of ARCO, ARCO's tender offer for all of the shares of Union Texas common stock for $29.00 per share (the "Tender Offer"). Union Texas concurrently filed and disseminated its
14D-9 Statement, representing that the Company's Board of Directors had
unanimously determined that terms of the Merger Agreement were "fair" and
allegedly in the best interest of the Company's shareholders, and affirmatively
recommended that the Company's shareholders tender their shares at the agreed
upon price. On or about June 16, 1998, after certain extensions, ARCO announced
that the Tender Offer had been completed and that approximately 84.69 million
shares, or 99%, of Union Texas' common stock had been caused to be tendered.
ARCO accepted the tendered shares for payment and became indirectly a 99% owner of Union Texas.
On or about June 29, 1998, ARCO implemented the merger of Union Texas and
VWK, converting each outstanding share of Union Texas common stock into $29.00
in cash (the "Merger"). As of this date, Union Texas ceased to exist as an
independently traded company, becoming a wholly-owned subsidiary of ARCO.
Plaintiffs allege that the 14D-9 Statement was materially false or misleading
and thus violative of Section 14(e) of the Securities Exchange Act of 1934 and
Rule 14e-3(a) promulgated thereunder, as defendants failed to disclose, inter
alia, the following material information:
(a) the estimated or anticipated output from such Company assets as the
Britannia Field, the Boqueron Unit, and the DZO unit, and the impact of their
significant new production and reserve increases on the operating cash flow,
earnings or share price of Union Texas;
(b) that Union Texas was engaged in potentially profitable exploration
opportunities in Azerbaijan, Kazakstan, and China that could have added
significant value to the Company's net worth;
(c) the probable and possible reserves of Union Texas or any Company
projections of future results;
(d) a description of or facts evidencing the method or manner by which the
$29.00 Tender Offer Price was established;
(e) any description of the presentations, analyses, and/or the assumptions
made by Salomon Smith Barney and Petrie Parkman & Co., Inc., the Union Texas's
financial advisors to the transaction; and
(f) the details and/or comparative value of two alternative business
combinations which were proposed to Union Texas by third parties not involved
in the Tender Offer.
The complaint alleges that in direct reliance on the materially false or
misleading 14D-9 Statement, plaintiffs and the other Union Texas shareholders
tendered their shares for $29.00 in cash, an artificially deflated and wholly
inadequate price. By virtue of the foregoing material misrepresentations and
omissions, plaintiffs and other members of the Class have been damaged and are
entitled to appropriate relief.