Paris Hilton Perfume Maker Sued by Investor Over Takeover

A shareholder of Parlux Fragrances Inc. sued the company’s board of directors, claiming they are selling the maker of Paris Hilton’s perfume too cheaply.

Jose Dias sued Parlux’s chairman, the company’s directors and the proposed buyer, Perfumania Holdings Inc., which operates a chain of perfume shops, in a case made public today in Delaware Chancery Court in Wilmington. Perfumania, controlled by the family of Chairman Glenn Nussdorf, is one of Parlux’s biggest customers, according to the complaint.

“Perfumania was able to use the company’s dependence on them to negotiate a deal that allowed it to pick up the company at an unfair price and under unfair terms,” Dias claimed in the complaint.

Parlux said the proposed cash and stock deal was worth $170 million when it was announced in December. Since then, Perfumania’s shares have plunged, reducing what Parlux’s investors will receive, according to the complaint.

The deal would give Perfumania control over its largest trading partner and the maker of celebrity-branded fragrances from Rihanna, Paris Hilton and Nicole Miller.

Under the sale, holders of Fort Lauderdale, Florida-based Parlux can choose to take $4 in cash and 0.20 share of Perfumania or 0.53333 of a share of the acquirer.

The board hasn’t released enough information about the proposal and failed to pursue a deal that is in the best interests of shareholders, Dias claimed in the suit.

The complaint asked the judge to halt the proposed sale and to certify the case as a class-action, or group, lawsuit to represent all shareholders.

Perfumania Chief Executive Officer Michael Katz and Palux CEO Frederick Purches didn’t immediately return calls seeking comment on the suit.

The case is Jose Dias v. Frederick E. Purches, CA 7199, Delaware Chancery Court (Wilmington).