The opinion of the court was delivered by: ROSENBERG
The United States of America, the plaintiff, acting through its Department of Justice, filed a complaint in the above entitled case against the defendants, Ling-Temco-Vought, Inc. (LTV), Jones & Laughlin Steel Corporation (J & L) and Jones & Laughlin Industries, Inc. (JLI) and sought an adjudication that the defendants were in violation of § 7 of the Clayton Act; that the defendants LTV and JLI be directed to divest themselves of all ownership interests in J & L and that in connection therewith injunctive processes issue.
The action asserted jurisdiction in this Court under § 15 of the Clayton Act, 15 U.S.C. § 25
and § 7 of the same Act, 15 U.S.C. § 18.
Through a series of offerings to the holders of J & L common stock, LTV through the intermediary of its subsidiary JLI had acquired in excess of 81.4% of the outstanding common stock of J & L.
The parties originally entered into and agreed upon a preliminary injunction which I approved and directed to be filed. Following that the parties commenced discovery procedures and during the course of such procedures arrived at an agreement for finally determining the entire action. The matter was presented to me by a stipulation and a suggested decree. I directed that the stipulation and proposed decree be filed, and because no evidence was presented in support of such decree, and for my guidance in evaluating such a decree, I scheduled an open public hearing for June 1, 1970 for the purpose of determining whether the settlement entered into between the parties in their proffered decree was in the public interest.
In the interim dozens of letters were sent to me by interested persons. Such letters were ordered filed and made a part of the record. The hearing on June 1st was attended by a large group of persons and those individuals who desired to be heard were given an opportunity to do so. I find that those who communicated their feelings either by letter or in the courtroom may be categorized generally as:
(a) those persons who are owners of LTV stock and have been severely affected financially because of the decline in the market price of LTV stock and who, for the most part, condemn the Justice Department as inter-meddling in the free enterprise activities of LTV;
(b) those persons who own stock or are investors in debt securities of J & L and who condemn LTV for its self-serving efforts in acquiring control of a corporation such as J & L and who fear that LTV will divert J & L's assets for the advantage of various other holdings;
(c) those pensioners and prospective pensioners under the J & L pension plans who are apprehensive of LTV's possible diminution of the accumulated trust assets; and
(d) Those employees of J & L who for the most part are concerned with possible disruption of their employment security and their employment rights, particularly unemployment and pension benefits as a result of the acquisition of LTV.
Practically all of these persons complained bitterly of the precipitous decline in the stock market values of LTV and J & L stocks and bonds or debentures and charged either the Government or LTV with blame for the rapid decline in value of these securities during 1969, and particularly in 1970. None of these individuals appear to have taken into consideration that the securities market in general has shown a severe decline during the same time.
From the letters I received and the presentation of those who attended the hearing, I have been shown the effect of this acquisition upon individual persons. I realize that there were heavy investors in LTV who have seen their fortunes reduced, as in the case of one individual who had 50,000 shares of stock which at one time was valued at $168.00 per share and is now quoted at $8.00 per share. Other individuals, who had purchased securities of J & L, particularly as a nest egg to guarantee them an income in their advanced years, have also suffered diminution in these resources. While considering all of these unfortunate circumstances it is my function to presently make a determination in accordance with the provisions of the Clayton Act and to best effectuate the public welfare.
The parties had previously filed a stipulation of certain facts on October 24, 1969, and pursuant to my order of April 10, 1970 filed a Stipulated Statement of Facts on May 8, 1970. From all of the evidence as a whole thus submitted to me, I make the following findings of fact:
That the jurisdiction of this case is vested in the United States District Court for the Western District of Pennsylvania;
That notice of these proceedings was duly made upon all the defendants in this case;
That on May 14, 1968, LTV offered to purchase for cash outstanding common stock of J & L for $85.00 per share, while at the same time, at or near that time, the market price of the common stock of J & L on the New York Stock Exchange ranged from a low of $51.875 to a high of $55.75;
That as a result of the offer, LTV acquired approximately 63% of the shares then outstanding, for approximately $425,000,000;
That on January 21, 1969, LTV caused JLI to be incorporated under the laws of the State of Delaware, and on March 13, 1969, LTV transferred to JLI all of the shares of the common stock of J & L owned by it in exchange for certain shares of common stock and certificates of indebtedness obligations, and that on March 17, 1969, became the owner of all outstanding stock of JLI;
That on March 17, 1969, JLI offered the public stockholders of J & L in exchange for each share of such stock: (a) $42.50 principal amount of 6 3/4% subordinated debentures of JLI due in 1994; (b) 1/10th share of common stock of JLI, and (c) 1/2 warrant expiring April 1, 1979, to purchase JLI common stock at $37.50 a full share, and thereafter JLI acquired additional shares of J & L common stock;
That as a result of these transactions, directly and indirectly, LTV holds approximately 81% of ...