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Tomy's $640 Million Offer for Maker of Thomas Toys Faces Investor Lawsuit

An RC2 Corp. (RCRC) investor sued the company, the maker of Thomas the Tank Engine products, and its board of directors to block its sale to Tomy Co., saying the $640 million price was inadequate.

The $27.90-a-share offer “substantially undervalues” RC2 and is an attempt by Tomy to buy the company “at a bargain price during a temporary downturn in the economy,” Laborers’ Local #231 Pension Plan said in a complaint filed today in state court in Chicago. The union fund, which seeks to represent other investors, accuses RC2 directors of breach of fiduciary duty.

Tomy, the Tokyo-based maker of Transformers and Pokemon toys, agreed to buy RC2 to add Thomas the Tank Engine products in North America as a declining birth rate erodes demand at home. The offer was valued at $27.90-a-share in cash, 27 percent more than the March 9 closing price, Oak Brook, Illinois-based RC2 and Tomy said March 10.

RC2 Chief Executive Officer Curtis Stoelting, who was also named as a defendant in the complaint, didn’t immediately return a call to his office after regular business hours.

The case is Laborers’ Local #231 Pension Plan v. RC2, 11CH10899, Circuit Court of Cook County Illinois, County Department, Chancery Division (Chicago).

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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