Gardner Denver Investors Say Ex-CEO Helped KKR Make Bid

Gardner Denver Inc. (GDI)’s former chief executive officer wrongfully helped KKR & Co. (KKR) bid for the company in a $3.7 billion deal that undervalues the industrial-equipment maker, investors contend in court filings.

Barry Pennypacker, who stepped down as Gardner Denver’s CEO last year, violated confidentiality agreements by working as a consultant to KKR, the private-equity firm offering $76 per share for the maker of air compressors and pumps, lawyers for company shareholders who sued to oppose the bid said in a Delaware Chancery Court filing in Wilmington.

KKR “improperly obtained confidential information from Pennypacker that gave KKR the conviction to submit” its winning bid, investors’ lawyers said in the filing yesterday. Disgruntled shareholders are asking a judge to block the buyout.

Officials of Wayne, Pennsylvania-based Gardner Denver said last year they were reviewing options after ValueAct Holdings LP, the firm’s third-largest investor, pressed directors to sell the firm in the wake of Pennypacker’s departure. KKR’s bid came after talks with SPX Corp (SPW), one of Gardner Denver’s competitors, didn’t result in a deal. Other private-equity firms, including Advent International Corp., Onex Corp. and TPG Capital, also walked away from takeover discussions, people familiar with the matter said.

Investors’ Allegations

Some Gardner Denver investors contend the company’s directors and KKR officials violated legal duties to shareholders by allowing Pennypacker to serve as a consultant on the bid after leaving the company. Pennpacker isn’t named as a defendant in the lawsuit.

“KKR has complied with all of its agreements with Gardner Denver about Mr. Pennypacker’s involvement in the transaction, and plaintiff’s allegations to the contrary are completely false,” Kristi Huller, a KKR spokeswoman, said in an e-mailed statement. Vikram Kini, a Gardner Denver spokesman, didn’t immediately return a call for comment today on the filing.

The case is In RE Gardner Denver Inc. Shareholder Litigation, CA No. 8505, Delaware Chancery Court (Wilmington)

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net; Sophia Pearson in Philadelphia at spearson3@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.