June 3 (Bloomberg) -- PetroLogistics LP, a producer of propylene used to make paints and packaging, was sued by an investor claiming a $2.1 billion all-cash buyout offer from a unit of Koch Industries Inc. is too low.
Directors of PetroLogistics shouldn’t have agreed to the deal because it’s “unfair and inadequate,” Tom Klemesrud, a shareholder, said in a complaint filed yesterday in Delaware Chancery Court in Wilmington.
The buyout is designed to discourage rival offers, partly by barring Houston-based PetroLogistics from soliciting alternative proposals, Klemesrud said. He asked the court to block completion of the sale.
The acquisition provides Koch Industries’ Flint Hills Resources unit with a key raw material it uses at plants in Texas and Michigan for making polypropylene, a polymer found in bottle caps, auto parts, carpet and clothing.
“We believe this is a fair offer based on historic market values and the level of future investment that will be required to maintain and grow the business,” Jake Reint, a spokesman for Flint Hills, said in an e-mailed statement.
“The merger agreement also provides for a so-called ‘window-shop’ period during which PetroLogistics may consider other proposals,” Reint added.
PetroLogistics officials weren’t immediately available for comment. A receptionist at the company said she would refer the request to an outside public relations firm.
Shares of PetroLogistics rose 1 cent to $14.40 in trading in New York at 2:15 p.m.
The case is Klemesrud v. PetroLogistics, CA9723, Delaware Chancery Court (Wilmington).
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