Dec. 2 (Bloomberg) -- DCC Plc, an Irish venture capitalist turned distributor of products ranging from oil to software, will today begin defending itself against insider-trading allegations by Fyffes Plc, Europe's biggest fruit and vegetable importer.

The 85 million-euro ($113 million) lawsuit between the two Dublin-based companies centers on a February 2000 sale of 31.2 million Fyffes shares by DCC. Fyffes argues DCC and its Chief Executive Officer Jim Flavin sold the stake knowing the stock would probably fall in value. DCC says none of its executives had any ``price sensitive'' information prior to the offering.

The case at the High Court in Dublin, which pits two of Ireland's best-known businesses against each other, is the first time an Irish company has sued another for insider trading. If DCC loses, it faces further lawsuits by fund managers including a unit of U.K. insurer Aviva Plc that bought the shares in 2000.

``You don't tend to see such aggressive litigation between large Irish companies,'' said Andreas McConnell, a partner at Brian O'Donnell & Partners, a Dublin law firm that isn't involved in the case. ``A lot of these things are dealt with by private negotiation and settlement.''

Fyffes said Nov. 30 it's ``very confident of the strength of the case.'' DCC has said the legal action is ``wholly unjustified'' and ``without merit.''

The trial, before Justice Mary Laffoy, is due to start at 11 a.m. local time and last at least four weeks.

Stock Slump

DCC sold its stake in Fyffes, representing about 10 percent of the outstanding shares, through Dublin stockbrokers Davy and Goodbody. DCC intended for ``several years'' to sell its stake in Fyffes as part of its evolution from a venture capital company and did so after receiving several unsolicited approaches from stockbrokers, it said in a statement to the Irish stock exchange in August.

After selling half of the shares on Feb. 3, 2000, DCC said it was ``encouraged'' by the fruit distributor's management to dispose of the rest, which it sold on Feb. 8 and Feb 14. DCC CEO Flavin, 62, was a member of Fyffes' board until Feb. 9.

The stock slumped 18 percent on March 20 after Fyffes said it expected first-half earnings to be less than comparable profit a year earlier because of ``difficult'' trading and the weakness of the euro against the dollar, which made it more expensive to buy fresh fruit traded in the U.S. currency.

Flavin set up Dublin-based DCC in 1976 after working as a venture capitalist. A series of acquisitions transformed it into a distribution company selling everything from software and data storage to oil and liquid gas.

Family Firm

Shares in Fyffes, which had its origins in the 1890s when Charles McCann began exporting apples to Canada, reached a record 4 euros apiece in mid-February 2000 partly on optimism about an Internet venture, worldoffruit.com, which has since closed down. Current CEO David McCann, great-grandson of the founder, and other family members own 11 percent of the company's shares.

Fyffes shares fell to 1 euro apiece by the end of 2000. They were up 2 cents at 2.08 euros as of 8:24 a.m. in Dublin, valuing the company at 721.2 million euros.

DCC's stock has climbed 47 percent this year, boosting its market value to 1.3 billion euros.

DCC has said the decline of Fyffes' shares coincided with the bursting of the Internet bubble and the drop in the Nasdaq Composite Index, a benchmark for Internet stocks, from its peak in March 2000.

Hibernian Investment Managers, which bought Fyffes shares in 2000, said it may take legal action if the court decides in favor of Fyffes. Hibernian is the Irish fund unit of Aviva.

The case is Fyffes Plc v DCC Plc & ORS, 2002 1183 9. Paul Gallagher SC and Dublin-based law firm Arthur Cox are representing Fyffes, while Michael Cush SC and Dublin law firm William Fry are acting for DCC.

To contact the reporter on this story: Brian O'Neill in Dublin at bjoneill@bloomberg.net.

Last Updated: December 2, 2004 03:30 EST