U.S. – DoJ Sham Fortune 500 Takeover Bid

U.S. – DoJ Sham Fortune 500 Takeover Bid

On 5 April 2022, DoJ, SEC issued charges re $14 billion tender offer fraud.

  • DoJ charged Melville ten Cate with tender offer fraud, securities fraud, and wire fraud in connection with several schemes on behalf of his company, Xcalibur Aerospace Ltd.
  • Schemes include fraud tender offer worth over $14bn, arising from ten Cate's allegedly sham offer to purchase Textron, a large US-listed aircraft, defense, industrial company.
  • SEC charged ten Cate with violating antifraud provisions as to the sham tender offer.

Tender Offer Fraud

  • In November 2020, ten Cate and Xcalibur Aerospace, a now-defunct private company ten Cate controlled, placed advertisement in The New York Times re purchase of Textron.
  • Announced proposed purchase of all existing stock of Textron for $60.50 a share.
  • Purchase price represented a 56% premium over the stock’s previous closing price.
  • The advertisement led to a spike in Textron trading and a subsequent trading halt.
  • Announcement was false, misleading because ten Cate and Xcalibur lacked financial resources to complete the transaction, which would have required over $14 billion.
  • Described Xcalibur’s corporate parent as a diversified global investment company, when it had no operations/assets and had been deactivated for failure to pay taxes.
  • Failed to disclose that ten Cate, entities he controlled had been the subject of multiple bankruptcy, default judgments and Textron previously rejected Xcalibur’s overtures.
  • Also, SEC investigation allegedly confirmed that defendant attempted to access SEC EDGAR system to complete process for public filing but was thwarted by SEC officials.

Other Fraud Schemes

  • From August 2019 to November 2020, defendant executed fraudulent schemes designed to induce others to invest in, or otherwise transfer money to, Xcalibur and himself.
  • Tried to secure $500mn in debt financing from US banks and third-party debt issuers.
  • In doing so, ten Cate materially misrepresented Xcalibur’s business activities, finances.
  • Falsely claimed that Xcalibur’s financial records had been audited by an international accounting firm, Xcalibur had outside investors, had cash reserves of almost £9.8 bn.


  • DoJ charged defendant with tender offer fraud, securities fraud, two counts wire fraud.
  • SEC charged ten Cate with violating antifraud provisions of the federal securities laws.
  • Seeking permanent and conduct-based injunctions, penalty, officer and director bar.