NATOMAS

Kirschner Brothers Oil, Inc., among others (the Kirschner plaintiffs) and Insurance Underwriters Clearing House, Inc. (Insurance Underwriters), filed an action against numerous defendants alleging negligent misrepresentation and violations of the federal Securities Act of 1933 and the California Corporations Code, all in conjunction with the sale of certain stock. Defendants’ demurrers were sustained, an order dismissing the action was entered, and this appeal followed. We affirm.

I

In November 1980, defendant Natomas Company (Natomas), a California corporation, offered 2.5 million shares of preferred stock pursuant to a registration statement and prospectus filed with the Securities and Exchange Commission. In 1980 and 1981, plaintiff Insurance Underwriters purchased 1,000 of those shares.

On May 23,1983, Diamond Shamrock Corporation (Diamond Shamrock), through a wholly owned subsidiary, commenced a tender offer for Natomas common stock and stated its intention to propose a merger between Natomas and the subsidiary. On May 24, 1983, the Kirschner plaintiffs bought 6,000 Natomas preferred shares.

Shortly thereafter, the boards of Diamond Shamrock and Natomas approved…