Fake $14.7 Billion Textron Takeover Bid Leads to Criminal Charge

(Bloomberg) — A supposed $14.7 billion offer to buy defense contractor and aircraft maker Textron Inc. in 2020 has resulted in criminal charges against the would-be acquirer.

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Melville ten Cate, 53, a dual U.S.-Netherlands citizen, was charged with fraud connected to several alleged schemes involving his now-defunct company, Xcalibur Aerospace Ltd., including the fake tender offer, prosecutors said in an indictment unsealed Tuesday in Manhattan federal court.

Ten Cate in November 2020 published the tender offer in the New York Times, falsely claiming London-based Xcalibur would buy all the outstanding shares that his company had lined up $11 billion in financing for the deal, according to the government.

Textron, which makes Bell helicopters as well as Cessna aircraft, issued a statement at the time calling Xcaliber’s offer “fictitious” and saying it violated U.S. securities laws.

U.S. prosecutors didn’t identify Textron or the Times in the indictment, but they were named in a civil complaint filed by the U.S. Securities and Exchange Commission on Tuesday. According to the SEC, the phony Xcalibur offer was a 56% premium over Textron’s previous closing price, driving shares up 15% and causing the New York Stock Exchange to halt trading in Textron.

Ten Cate, who lives in Dubai, isn’t in U.S. custody, Manhattan U.S. Attorney Damian Williams said in a statement.

In addition to the Textron offer, ten Cate is charged with lying about Xcalibur’s finances to try to win $500 million in debt financing from banks and investors.

Ten Cate is charged with one count of tender offer fraud, one count of securities fraud, and two counts of wire fraud. Each of the counts carries a maximum of 20 years in prison.

The cases are: U.S. v. Ten Cate, 22-cr-00198; Securities and Exchange Commission v. Ten Cate, 22-cv-02787, U.S. District Court, Southern District of New York (Manhattan).