Whittaker Corporation v. Edgar

United States District Court for the Northern District of Illinois · 1982 · Corporations

535 F. Supp. 933 (N.D. Ill. 1982)

Updated August 22, 2026

CorporationsTender offersWilliams ActPreliminary injunctionsBusiness judgment ruleSection 14(e)Section 7 of the Clayton ActDelaware corporate law

Facts

Whittaker launched a tender offer to acquire up to about 49% of Brunswick and proposed a later merger. In response, Brunswick sought alternatives and entered an agreement with American Home Products under which American Home would acquire Sherwood, a major Brunswick medical subsidiary, through a tender-offer-and-redemption structure or, if that failed, by a cash purchase. Brunswick claimed Whittaker's tender materials inadequately disclosed aspects of Whittaker's Saudi Arabian operations and misstated the value of securities to be issued in a merger, while Whittaker claimed Brunswick's Sherwood transaction and shareholder communications were misleading and that the sale functioned as an unlawful lock-up. Brunswick also argued that a Whittaker-Brunswick merger would lessen competition in aircraft valves, and Whittaker argued Brunswick's board breached fiduciary duties and needed shareholder approval under Delaware law to sell Sherwood.

Issue

Whether either side was entitled to a preliminary injunction: Brunswick based on alleged Williams Act disclosure violations and antitrust concerns arising from Whittaker's offer, and Whittaker based on alleged Williams Act violations, manipulative conduct, fiduciary breaches, and Delaware section 271 problems arising from Brunswick's sale of Sherwood to American Home. More specifically, the court had to decide whether either party showed a reasonable likelihood of success on the merits.

Rule

A preliminary injunction requires proof of no adequate remedy at law, irreparable harm, a balance of harms favoring the movant, a showing that the injunction will not disserve the public interest, and at least a reasonable likelihood of success on the merits. Under section 14(e), an omitted or misstated fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important, and manipulative conduct means artificial interference with market forces rather than ordinary market competition. In takeover-defense cases, directors are protected by the business judgment rule if they act in good faith, with due care, and without personal interest, and under Delaware section 271 shareholder approval is required only for a sale that is quantitatively vital and strikes at the heart of the corporation's existence and purpose.

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Granite Harbor Industries launched a hostile tender offer for Lakeview Components, a Delaware corporation based in Milwaukee. Lakeview sued in federal court in Chicago seeking to enjoin the offer, showing likely irreparable harm from allegedly misleading tender materials, but the record indicates Lakeview is unlikely to succeed on the merits of its securities claim.

Should the court issue the preliminary injunction?

Explanation. A preliminary injunction requires all elements: no adequate remedy at law, irreparable harm, favorable balance of harms, no disservice to the public interest, and at least a reasonable likelihood of success on the merits. Under the majority opinion, even where irreparable harm exists in a tender-offer dispute, the injunction must be denied if the movant fails to show likely success on the underlying claim. (Derived from Whittaker Corporation v. Edgar (1982).)