Supreme Court addresses right of first refusal principles in case involving 'sham' offer.

Byline: Michaela Paukner, mpaukner@wislawjournal.com

The Wisconsin Supreme Court hasruled that a Fond du Lac County court didn't violate right-of-first-refusal principles in its decision to set an exercise price higher than fair-market value.

The case, decided on Wednesday, involved a contract between Country Visions Cooperative andArcher-Daniels-Midland Co. that grantedCountry Visions a right of first refusal to purchase a property in Ripon.

In May 2015, ADM started negotiations to sell its Wisconsin grain business assets to United, a third party. They reached a tentative agreement of $25 million for the Ripon property and three other grain-storage centers in the state.

Country Visions learned about the proposed sale in October 2015 and requested a copy of the offer to purchase to decide whether to exercise its right of first refusal. ADM restructured the agreement into two separate transactions and called for United to purchase the Ripon center for $20 million, and the other three properties and all personal property for $5 million.The state Supreme Court opinion said Country Visions claimed the $20 million purchase price was a sham and chose not to meet the terms of the third-party offer. United closed on both transactions.

Country Visions then filed a lawsuit against ADM seeking a declaratory judgment that it had the right to purchase the Ripon property for its fair-market value, which its expert placed at $7.7 million. Meanwhile, ADM's expert said the property was worth $16.6 million to United.

Fond du Lac County Judge Gary Sharpe decided that the $20 million offer was "a sham at an arbitrarily inflated price" meant to prevent Country Visions from exercising the right of first refusal. Sharpe granted Country Visions specific performance to exercise the right of first refusal and gavethe company 15 days to exercise the right of first refusal at the $16.6 million exercise price.

Both companies appealed. The Court of Appeals concluded that the circuit court was right to find that the higher valuation was appropriate, but the appellate courtwas unclear if the actual dollar amount, $16.6 million, was right.Thejudges remanded the case to decide what part of the $25 million sale price was fairly allocable to the Ripon property.

Those same issues then went to the state Supreme Court for review.The justices were unanimous in their decision that the circuit court had not violated the basic right of first refusal principles in setting the...