Dec. 27 (Bloomberg) -- Airgas Inc., the packaged-gases company fighting a hostile takeover attempt, must detail why it rejected Air Products & Chemicals Inc.’s latest offer, a judge said.
Delaware Chancery Court Judge William B. Chandler III told attorneys to prepare to deliver additional arguments on Jan. 25. Chandler said last week that he wouldn’t rule on the validity of Airgas’s anti-takeover defense until next year. He asked Airgas to provide “the necessary factual record” concerning its consideration of the latest offer and subsequent determination it was inadequate.
“A supplemental evidentiary hearing is necessary before this court can rule with respect to the $70 offer,” Chandler wrote in a letter to the lawyers on Dec. 23. “The underlying dispute -- fundamentally whether Airgas can continue to maintain its poison pill in the face of an all-cash structurally noncoercive offer -- is as live a controversy today as it ever was.”
Air Products, which has been pursuing Radnor, Pennsylvania-based Airgas for more than a year, raised its bid on Dec. 9 from $65.50 and called it the “best and final offer.” On Dec. 22, Airgas rejected the offer, which amounts to $5.89 billion, as too low.
Chandler is deciding whether Airgas’s so-called poison-pill defense is valid. That defense is designed to make hostile takeovers of the industrial gas distributor prohibitively expensive. Airgas officials have used the defense to help fend off Air Products’ offers. Chandler held a weeklong trial in October on whether the defense unfairly barred investors from considering Air Products’ bid of $65.50 at the time.
The case is Air Products and Chemicals Inc. v. Airgas Inc., CA5249, Delaware Chancery Court (Wilmington).
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InterMune Investors Sued by SEC for Insider Trading
The U.S. Securities and Exchange Commission sued unknown buyers of options on the stock of InterMune Inc., a biopharmaceutical maker, claiming they had inside information about regulatory approval of its drug Esbriet.
In a complaint filed Dec. 23 in federal court in Manhattan, the SEC said the unknown parties bought 637 options contracts on the Chicago Board Options Exchange and the Philadelphia Stock Exchange between Dec. 7 and 13. The options to buy shares were bets that their price would rise.
On Dec. 17, Brisbane, California-based InterMune said a European Union regulator had recommended granting marketing authorization for Esbriet, a treatment for idiopathic pulmonary fibrosis, a fatal lung disease. InterMune soared $20.62 to $34.89 in Nasdaq Stock Market trading that day, the biggest one-day gain since its March 2000 initial public offering.
“After the announcement and the opening of the New York securities markets, the price of InterMune stock rose materially, approximately 144 percent during a single trading day,” the agency said in its complaint.
As a result, the unknown options buyers may have made profits of $912,000, the SEC said. The trades were made using anonymous accounts held at UBS Securities Ltd. and Barclays Capital Inc. in London, according to the complaint.
The case is Securities and Exchange Commission v. One or More Unknown Purchasers of Options of InterMune Inc., 10-cv-09560, U.S. District Court, Southern District of New York (Manhattan).
Icahn Sued by Blockbuster Creditor Over Conversion of Equity
A Blockbuster Inc. creditor sued Carl Icahn, accusing the billionaire investor of improperly converting his equity stake to debt to take control of the company after its reorganization in bankruptcy.
The creditor, Lyme Regis Partners LLC, previously sought to subpoena information about Icahn’s investments in the bankruptcy of the world’s largest movie-rental company.
U.S. Bankruptcy Judge Burton Lifland in New York ruled Dec. 16 that Lyme Regis couldn’t pursue a probe of its own. The creditor filed its adversary case against Icahn Dec. 23.
Icahn, his companies and investment funds including Icahn LP used “their position of power and inside information to sell their equity interests and essentially convert them into a potentially controlling” amount of debt because the notes allowed Icahn to gain control of Dallas-based Blockbuster “during and after it emerged from bankruptcy,” according to the filing.
Lyme Regis said in last week’s filing that it holds more than $570,000 of Blockbuster’s unsecured notes.
Blockbuster filed for Chapter 11 bankruptcy Sept. 23, with the support of lenders who held 80 percent of its secured notes and agreed to finance operations in bankruptcy.
Creditors in the case, who already have permission to seek documents from Blockbuster in an investigation of its bankruptcy, have said in court papers that a probe of the liens of senior noteholders is needed. Secured debt will be converted to equity in the reorganized company under the bankruptcy plan and unsecured creditors will get a “de minimis,” or negligible return, the creditors said.
Icahn Partners LP was one of the lenders, along with Monarch Capital Master Partners LP, Owl Creek Asset Management LP, and others.
Dominick Ragone, the chief financial officer and a spokesman for Icahn Enterprises LP, didn’t immediately return a call seeking comment after regular business hours Dec. 23.
The case is In re Blockbuster, 10-14997, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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Fund Manager Appeals Singapore’s First Stock-Rigging Case
Pheim Asset Management Sdn and Chief Executive Officer Tan Chong Koay appealed a Singapore High Court ruling that they manipulated the shares of a listed company in the country’s first civil stock-rigging lawsuit.
“If left to stand, the decision would either serve to curtail genuine market activity by the timorous or to set a penal trap for the unwary,” they said in their appeal filed Dec. 21 at the Singapore High Court.
Tan and Pheim bought almost 90 percent of the traded shares of United Envirotech Ltd. from Dec. 29 to Dec. 31, 2004. The shares rose 17 percent during the three trading days and helped raise the net asset value of the fund management firm’s accounts, triggering bonuses of S$50,790 ($38,866) and a management fee of S$115. Justice Lai Siu Chiu said the gain sought by Pheim and Tan wasn’t monetary, in ruling they manipulated the stock.
Tan and his Malaysian fund-management company were fined S$250,000 each. The Monetary Authority of Singapore sought a fine of S$1 million for each.
Pheim “is a value investor,” the company and Tan said in their appeal. “Pheim is also a contrarian investor -- buying when others are selling and selling when others are buying.”
The Monetary Authority has no evidence to prove Pheim and Tan had any other intention but to buy undervalued shares, they said in the 212 pages of court documents filed to back the appeal.
“There was in fact no other intention,” they said.
The case is Pheim Asset Management Sdn Bhd. v Monetary Authority of Singapore, CA186/2010 in the Singapore High Court.
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Daimler Case Over Schrempp Resignation Is Referred to EU Court
A German court asked European Union judges to review several issues in a shareholder lawsuit over the timing of Daimler AG’s disclosure of Chief Executive Officer Juergen Schrempp’s 2005 resignation.
The Federal Court of Justice, Germany’s highest civil tribunal, said Dec. 23 it needed guidance on how EU laws on market manipulation and inside information are to be interpreted.
“The Federal Court of Justice has therefore suspended the proceedings and presented questions to the European Union’s Court of Justice for an advance decision,” the court said in an e-mailed statement.
Daimler shareholders claim the automaker didn’t disclose Schrempp’s resignation as quickly as it should have. The Stuttgart, Germany-based manufacturer published the former CEO’s departure on July 28, 2005. Following the release of second-quarter earnings and the news that Schrempp was to leave, Daimler rose 3.16 euros, or 8.7 percent, to 39.49 euros.
Daimler’s legal spokeswoman, Ute Vellberg, didn’t return calls seeking comment. Wolfgang Eick, a spokesman at the Karlsruhe-based court, also couldn’t be reached.
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Parrett, Former Fugitive Facing 25 Years, Apologizes
Rebecca Parrett, the former National Century Financial Enterprises Inc. executive who fled the U.S. to avoid going to prison for fraud, apologized to the judge who gave her a 25-year term and said she went to Mexico to die.
Parrett, 62, was arrested Oct. 26 by Mexican immigration authorities in the resort town of Ajijic, Jalisco, more than 2 1/2 years after disappearing. She was convicted in Columbus, Ohio, in March 2008 for her role in a fraud at National Century, a defunct health-care financing company. Days later, while on bail, she fled her home in Carefree, Arizona.
Parrett appeared Dec. 23 before U.S. District Judge Algenon Marbley, who had sentenced her in absentia in March 2009 and imposed a $2.38 billion restitution order on her. She said she was innocent of the corporate-fraud charges. Parrett said had been sick and on medication when she was convicted at trial.
“When you said guilty, I just felt like my body went into a black hole,” said Parrett, who was shackled and in khaki jail garb. “I just did not want to live anymore. So my course to Mexico was not to escape. My course to Mexico was to die, your honor. But that didn’t happen either.”
Parrett was convicted with four other executives of fraud, money laundering and conspiracy. A former vice chairman, secretary and treasurer, she is one of 10 executives who were convicted at trial or pleaded guilty. On the day he sentenced Parrett, Marbley imposed a 30-year term on former Chief Executive Officer Lance Poulsen.
“I am innocent,” said Parrett, who has curly red hair and stands 4-feet, 11-inches. “You have the power and the authority to take my personal freedom. But my spiritual freedom, your honor, is protected forever by my lord and savior, Jesus Christ. I am sorry for what I did but I am innocent.”
After Parrett’s arrest, Deputy U.S. Marshal Brian Babtist said she was “living in the lap of luxury” in Ajijic on the north shore of Lake Chapala. She used an alias and told people she was an American who testified against others in a large white-collar crime case, he said. She went out dancing and got treatments from a Mexican anti-aging doctor, Babtist said.
The case is U.S. v. Poulsen, 06-129, U.S. District Court, Southern District of Ohio (Columbus).
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Refco’s Elsner Sentence Raised in Austrian Bawag Case
Austria’s highest court sentenced former Refco Inc. banker Helmut Elsner’s to 10 years in jail in a case involving charges he caused 1.2 billion euros ($1.57 billion) of losses at Austria’s Bawag PSK.
While the court in Vienna granted Elsner a new trial Dec. 23 on charges involving 500 million euros of losses, the judges upheld the biggest part of the damages Elsner was accused of causing. They said the losses were big enough to order the highest possible sentence for misuse of funds.
Wolfgang Flottl, the most prominent of the eight other defendants convicted in 2008 in Austria’s biggest white-collar case ever, was granted a full retrial. The court also ordered new trials in part or in full for the other seven men.
Elsner, the 75 year-old former chief executive officer of Bawag; Flottl, who is married to a granddaughter of former U.S. President Dwight Eisenhower; and the others had been charged with misuse of funds, fraud and false accounting at Bawag, which was owned by Austria’s trade union federation.
Flottl had run up the losses for Bawag from the late 1990s, mostly with wrong-way bets on the Japanese yen. They weren’t discovered until Refco, a U.S. futures broker, collapsed into bankruptcy in 2006. Their discovery eventually forced the trade union to sell Bawag to private-equity firm Cerberus Capital Management LP in 2007.
Elsner’s lawyer, Juergen Mertens, said the court was wrong to order the longest possible sentence.
“This ruling means it doesn’t matter if someone doesn’t have a criminal history, what his contribution to the crime was, how old he is, et cetera,” Mertens said on the phone from Vienna. “Courts have to differentiate.”
The court added 7 1/2 years to a 2 1/2-year prison sentence Elsner had got in a separate case, bringing the total sentence to the maximum 10 years. Elsner’s original sentence had been 9 1/2 years.
The sentence against Elsner can’t be reduced even if the retrial of the remaining charges finds him not guilty, court spokesman Kurt Kirchbacher said.
Mylan Agrees to Settle Medicaid Case for $65 Million
Mylan Inc. agreed to pay $65 million to settle a lawsuit by the U.S. and Texas alleging it inflated prescription drug prices, increasing the cost of reimbursing pharmacies and other providers.
The generic-drug maker, based in Pittsburgh, admitted no wrongdoing in agreeing to the payment, it said Dec. 24 in a statement.
Since 2003, Mylan has been sued by 18 states making similar allegations, according to the company’s 2009 annual report filed with the U.S. Securities and Exchange Commission.
Last year, Mylan, AstraZeneca Plc and Johnson & Johnson agreed to pay $124 million to settle claims they violated the U.S. False Claims Act by underpaying Medicaid rebates, the Justice Department said.
The current suit was provisionally resolved early this year, Mylan said.
Dean Foods, Dairy Farmers Settle Suit for $30 Million
Dean Foods Co., the biggest U.S. milk-products maker, settled an antitrust lawsuit with Northeast Dairy Farmers, agreeing to pay $30 million in damages and buy milk from producers in the region.
Dean Foods and the Dairy Farmers of America cooperative were sued last year by the rival group and accused of operating a monopoly in the Northeast U.S. Farmers received lower prices because Dean bought milk exclusively from the cooperative and its affiliates, according to a complaint in federal court in Burlington, Vermont.
The court hasn’t approved the settlement yet, according to a statement by the Northeast Dairy Farmers. The plaintiffs filed a motion Dec. 23 for preliminary approval of the accord.
“Dean has not admitted any wrongdoing and is confident that it has conducted its business lawfully and fairly,” Marguerite Copel, a spokeswoman for the Dallas-based company, said Dec. 24 in an e-mailed statement.
The commitment to buy milk directly from the plaintiff group “is consistent with changes that Dean Foods began to implement last year and reflects the evolution of the company’s supply chain infrastructure,” she said.
The case is Allen v. Dairy Farmers of America Inc., 5:09-cv-00230, U.S. District Court, District of Vermont (Burlington).
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A&P Bankruptcy Most Popular Docket on Bloomberg
The bankruptcy docket of the Great Atlantic & Pacific Tea Co. was the most-read litigation docket on the Bloomberg Law system last week.
The retailer, incorporated 110 years ago and based in Montvale, New Jersey, operates almost 400 supermarkets including stores under its own name, Super Fresh and Food Basics. It listed assets of $2.5 billion and debt of $3.2 billion in a Chapter 11 filing Dec. 13.
The case is Re The Great Atlantic & Pacific Tea Co. 10-24549. U.S. Bankruptcy Court, Southern District of New York (White Plains).
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To contact the editor responsible for this story: David E. Rovella at email@example.com.