Two television producers won a round in a federal appeals court Monday in their bid to buy Evening News Assn. for $556 million.
A three-judge panel of the U.S. 6th Circuit Court of Appeals granted a request by Norman Lear and A. Jerrold Perenchio through their company, L. P. Media, to temporarily halt enforcement of a Michigan anti-takeover law.
L. P. Media's lawyers argued that the law would make the proposed takeover of the Detroit-based company difficult or impossible by indefinitely delaying it.
The appeals court sent the case back to U.S. District Judge Robert DeMascio of Detroit and ordered that a temporary restraining order be issued to prevent enforcement of the Michigan law against L. P. Media.
The appeals court also ordered DeMascio to hear arguments by L. P. Media for a permanent restraining order preventing Michigan officials or Evening News Assn. from enforcing provisions of Michigan's anti-takeover law. The law requires that a takeover offer for a Michigan-based corporation must be extended for at least 60 days, with advance notification required to the state that the offer is coming.
The Michigan law also allows for state-conducted hearings to determine whether the offer was properly registered.
Federal securities law, which applies to takeovers, requires that a takeover offer be extended for 20 business days, excluding weekends and holidays. The appeals judges ruled that the Michigan law is preempted by the federal law when it conflicts with the latter statute.
Lawyers for Lear and Perenchio contended, in an Aug. 20 hearing before the federal appeals court, that the Michigan law unconstitutionally interfered with interstate commerce by hindering the group's efforts to buy Evening News Assn. stock from shareholders who live outside of Michigan.
Evening News Assn., publisher of the Detroit News and owner of WDVM in Washington, initially rejected a $1,000-per-share offer by L. P. Media.
Evening News directors said later that all or part of the company is for sale but warned shareholders against negotiating with the two producers, who had raised their offer to $1,250 per share.
DeMascio had said the purchase of Evening News stock should be regulated by the state because it is not publicly traded and therefore the transaction is not subject to Securities and Exchange Commission regulation.
The appeals court reversed that ruling, which was opposed by the SEC, and ordered the lower court to block state enforcement pending hearings on L. P. Media's lawsuit.
Evening News Assn. issued a statement Monday afternoon saying that its lawyers were reviewing the appeals court decision.
"The 6th Circuit Court of Appeals decision renders certain portions of the Michigan takeover offers act unenforceable," the statement said. "The ENA board of directors will meet (today) . . . and will hasten its effort to provide the highest price for ENA shares."
L. P. Media said in response to the ruling: "We will now be able to present our offer to Michigan shareholders whom we have previously been prohibited from soliciting."