MedImmune’s proposed sale to AstraZeneca for $15.6 billion was seen as a good piece of business by the US firm but it has emerged that one of its shareholders does not think so.
Charles Larson has filed a class-action lawsuit at the Montgomery County Circuit Court, days after the merger was announced, against the company, its executives and directors, on behalf of all MedImmune shareholders, and claimed that the board has breached its duties of “loyalty, due care, independence, candour, good faith and fair dealing” in doing the deal.
Details of the action, which can be found in a regulatory filing to the US Securities and Exchange Commission by MedImmune, shows Mr Larson arguing that "instead of attempting to obtain the highest value reasonably available for the company's stockholders, defendants spent a substantial effort tailoring the acquisition to meet the specific needs of AstraZeneca".
“In short,” the suit states, “the acquisition is designed to unlawfully divest MedImmune's public stockholders of their holdings without providing them the maximised value they are entitled to. Defendants know that these assets will continue to produce substantial revenue and earnings.” The company’s management are also criticised for pursuing “any proposed transaction wherein they will reap disproportionate benefits”. The action then calls on the court to stop the merger and on management to consider alternatives to the AstraZeneca link-up, “including the solicitation of bids from interested parties.”
Case has no merit, says MedImmune
MedImmune says the lawsuit is without merit and plans to fight the case vigorously in court. It has taken observers by surprise, especially as most analysts feel that AstraZeneca's $58 per share offer is excessive. Moreover, in earlier regulatory filings regarding the merger, the two companies disclosed that competing bids to purchase MedImmune ranged from $44 to $51 a share, and AstraZeneca had to up its initial offer from $50 to seal the deal.
If the transaction does proceed, MedImmune's chief executive David Mott, who currently holds nearly five million shares, or 2% of the company, will get almost $287 million, while founder and board chair Wayne Hockmeyer will receive $109 million for his 1.9 million shares.