Frandsen v. Jensen-Sundquist Agency, Inc.
United States Court of Appeals for the Seventh Circuit
802 F.2d 941 (7th Cir. 1986)
Frandsen (plaintiff) held 8% of Jensen-Sundquist (defendant), whose majority shareholders held 52% under a stockholder agreement giving Frandsen a right of first refusal if the majority ever offered to sell its shares to anyone. The majority bloc instead negotiated to merge Jensen-Sundquist's key asset, First Bank, into First Wisconsin; when they asked Frandsen to waive any rights he might have in the deal, he refused and instead tried to invoke his right of first refusal by offering to buy the majority's shares directly. The majority proceeded with the merger anyway, and Frandsen sued for breach of the stockholder agreement; the district court granted the majority summary judgment.
Whether a merger, in which the acquired corporation's shares are extinguished into the acquiring entity, constitutes a sale of stock from one entity to the other.