Trueblood Case 11_3 Master_of_the_Universe
Case 11-3
Master of the Universe
Saturn Inc. (“Saturn”) and Venus Inc. (“Venus”), two unrelated parties, form Jupiter, a joint venture. Saturn owns 51 percent of Jupiter and Venus owns 49 percent of Jupiter.
The purpose of Jupiter is to own and operate organic clothing design and manufacturing facilities and sell organic clothing to unrelated retailers. When Jupiter was formed, Saturn contributed $561 million to Jupiter and Venus contributed four manufacturing facilities with an assembled workforce, with a total fair value of $539 million to Jupiter. Venus was looking to exit its clothing manufacturing business, as this business no longer was a strategic fit for Venus. However, Saturn was looking to expand its footprint in the manufacturing of children’s clothing. In exchange for their contributions, Saturn and
Venus received a combination of equity and debt securities for Jupiter (in proportion to their overall contributions).
The Articles of Incorporation of Jupiter state the following in terms of governance and management of Jupiter:
The Board of Jupiter (the “Board”) comprises eight individuals, four each from
Saturn and Venus.
Both Saturn and Venus are able to nominate individuals for the position of CEO of Jupiter (the “CEO”).
The CEO is responsible for the day-to-day operations of Jupiter.
Most Board actions are passed by a simple majority vote; however, the following actions cannot be taken without unanimous approval of the Board: o Appointment and removal of the CEO. o Decision to make calls for capital contributions. o Admission of new joint venture members. o Mergers and acquisitions.
The power to make strategic decisions regarding the operations of Jupiter has been divided between Saturn and Venus. Saturn controls all decisions regarding the design, manufacturing, pricing, and sales of the clothing. Venus controls all decisions regarding distributing clothing in fulfillment of sales
Master of the Universe
Saturn Inc. (“Saturn”) and Venus Inc. (“Venus”), two unrelated parties, form Jupiter, a joint venture. Saturn owns 51 percent of Jupiter and Venus owns 49 percent of Jupiter.
The purpose of Jupiter is to own and operate organic clothing design and manufacturing facilities and sell organic clothing to unrelated retailers. When Jupiter was formed, Saturn contributed $561 million to Jupiter and Venus contributed four manufacturing facilities with an assembled workforce, with a total fair value of $539 million to Jupiter. Venus was looking to exit its clothing manufacturing business, as this business no longer was a strategic fit for Venus. However, Saturn was looking to expand its footprint in the manufacturing of children’s clothing. In exchange for their contributions, Saturn and
Venus received a combination of equity and debt securities for Jupiter (in proportion to their overall contributions).
The Articles of Incorporation of Jupiter state the following in terms of governance and management of Jupiter:
The Board of Jupiter (the “Board”) comprises eight individuals, four each from
Saturn and Venus.
Both Saturn and Venus are able to nominate individuals for the position of CEO of Jupiter (the “CEO”).
The CEO is responsible for the day-to-day operations of Jupiter.
Most Board actions are passed by a simple majority vote; however, the following actions cannot be taken without unanimous approval of the Board: o Appointment and removal of the CEO. o Decision to make calls for capital contributions. o Admission of new joint venture members. o Mergers and acquisitions.
The power to make strategic decisions regarding the operations of Jupiter has been divided between Saturn and Venus. Saturn controls all decisions regarding the design, manufacturing, pricing, and sales of the clothing. Venus controls all decisions regarding distributing clothing in fulfillment of sales