Pension Plans Sues To Block Lilly-ImClone Deal
1 CommentBy Ed Silverman // October 27th, 2008 // 11:01 am
A pension plan has filed a legal challenge in an effort to stop Lilly from buying ImClone Systems, because the $6.5 billion deal is unfair to ImClone stockholders. The deal “is the result of a hopelessly flawed process,” the State-Boston Retirement System of Massachusetts contends in its lawsuit, according to Reuters.
The pension plan, and several other individual ImClone shareholders, want to stop the merger until more info is presented to stockholders. They accused ImClone’s board of directors, including billionaire investor Carl Icahn, who is the biotech’s board, of breaching their fiduciary duties in agreeing to the October 6 deal. Lilly was also named as a defendant.
The lawsuit, filed October 22 in New York State Supreme Court, accuses ImClone of blocking alternative offers to buy the company and failing to provide shareholders with material info on the proposed merger, and seeks class-action status on behalf of other ImClone stockholders.
ImClone and Lilly both disclosed the lawsuit in regulatory filings and that a court hearing is scheduled for Thursday. The drugmakers believe the complaint was without merit and they plan to vigorously defend themselves against the lawsuit.
Chris MacDonald
This story is a nice counter-example to the “standard” assumption that firms (and boards) are obsessed with shareholder profit. In this case, the accusation, at least, is that the board isn’t don’t enough to promote the interests of shareholders.
It also illustrates that “shareholders” are not homogenous. Icahn (who chairs the Board) owns a bunch of ImClone shares, but his interests don’t necessarily coincide entirely with those of other shareholders.