Gentium SpA’s board was sued by shareholders seeking to stop Jazz Pharmaceuticals Plc from buying the rare-disease drug developer because they claim the $1 billion deal is “hopelessly flawed.”
The plaintiffs also sued Jazz, alleging that the tender offer to acquire Gentium for $57 a share was designed to ensure the sale on terms that were “preferential” to Gentium’s board and Jazz.
Gentium’s board and the company will receive more than $360 million from the sale of their illiquid holdings, according to the proposed class action, or group lawsuit, filed today in Manhattan federal court. The defendants breached their fiduciary duty to secure the best price possible for Gentium’s shares and filed false and misleading documents with the U.S. Securities and Exchange Commission, according to the investors.
Jazz, which is based in Dublin, agreed last month to buy Villa Guardia, Italy-based Gentium in a tender offer that will expire on Jan. 22. Jazz is the maker of the narcolepsy treatment Xyrem, which was expected to generate sales of $567 million last year, according to the average of eight analysts’ estimates compiled by Bloomberg.
Laurie Hurley, a spokeswoman for Jazz, and Chelsea Wheeler, a spokeswoman for Gentium, didn’t immediately return a voice-mail message left at their offices after regular business hours seeking comment on the lawsuit.
Xavion Jyles v. Gentium, 14-CV-287, U.S. District Court, Southern District of New York (Manhattan).