By Ann C. Logue
This week, the SEC filed charges against Melville ten Cate for making an elaborate but infeasible takeover bid for Textron (NYSE: TXT), the defense and aerospace giant, through a company that had no revenue or capital.
Ten Cate styled himself as the chief technology officer of a UK company called Xcalibur Aerospace. The company’s business seems to have been floating trial balloons. Ten Cate made industry headlines through such schemes as a military training facility in Iceland that would acquire Russian fighter planes.
The US Department of Justice indictment alleges that ten Cate started looking for $500 million in funding for a new autonomous aircraft, claiming that his company had designed the plane and now needed funding to build a prototype and secure government contracts. Reader, he had not designed the plane. He did create false financial statements that he gave to an investment bank has part of his search for funding.
When prospective funders asked questions about the company’s figures, ten Cate responded that it had enough assets that it was going to place a bid to acquire Textron. To show that he was serious, he took out an ad in the New York Times on November 9, 2020, stating that he was offering $60.50 per share for Textron, a 56% premium to the company’s price at the time. Traders jumped in, rode the price increase, then lost money when Textron announced that the offer was not legitimate.
Reader, he did not pay for the ad.
Ten Cate had already sent Textron a letter offering to acquire it in 2019. The company’s management investigated the offer, found that ten Cate had a complicated business history and that Xcalibur Aerospace wasn’t much of a company, and ignored it.
This week, the SEC filed charges against Melville ten Cate for making an elaborate but infeasible takeover bid for Textron (NYSE: TXT), the defense and aerospace giant, through a company that had no revenue or capital.
Ten Cate styled himself as the chief technology officer of a UK company called Xcalibur Aerospace. The company’s business seems to have been floating trial balloons. Ten Cate made industry headlines though such schemes as a military training facility in Iceland that would acquire Russian fighter planes.
The US Department of Justice indictment alleges that ten Cate started looking for $500 million in funding for a new autonomous aircraft, claiming that his company had designed the plane and now needed funding to build a prototype and secure government contracts. Reader, he had not designed the plane. He did create false financial statements that he gave to an investment bank has part of his search for funding.
When prospective funders asked questions about the company’s figures, ten Cate responded that it had enough assets that it was going to place a bid to acquire Textron. To show that he was serious, he took out an ad in the New York Times on November 9, 2020, ten Cate took out an ad in the New York Times offering $60.50 per share for Textron, a 56% premium to the company’s price at the time. Traders jumped in, rode the price increase, then lost money when Textron announced that the offer was not legitimate.
Reader, he did not pay for the ad.
Ten Cate had already sent Textron a letter offering to acquire it in 2019. The company’s management investigated the offer, found that ten Cate had a complicated business history and that Xcalibur Aerospace wasn’t much of a company, and ignored it.
The SEC complaint doesn’t list a motivation. If ten Cate owned Textron shares, this might have been a grand pump and dump or greenmail scheme, but the SEC charges don’t mention any holdings. Instead, he apparently thought that financing would manifest if he put the offer out into the world. Was this a hoax, a delusion, or a grand scheme? We’ll have to wait for the movie to find out.
The SEC complaint doesn’t list a motivation. If ten Cate owned Textron shares, this might have been a grand pump and dump or greenmail scheme, but the SEC charges don’t mention any holdings. Instead, he apparently thought that financing would manifest if he put the offer out into the world. Was this a hoax, a delusion, or a grand scheme? We’ll have to wait for the movie to find out.
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