Lear Faces 6 Lawsuits Challenging $2.8B Acquisition by Icahn
February 28th, 2007 - Category: Real EstateLear Corp. said Tuesday it faces six lawsuits from shareholders seeking to block the automotive parts supplier’s acquisition by billionaire investor Carl Icahn.
Southfield, Mich.-based Lear agreed earlier this month to be acquired by Icahn affiliate American Real Estate Partners LP, for $36 a share, but created a 45-day period to accept competing offers.
Shares of Lear closed Tuesday at $37.03 on the New York Stock Exchange, down $2.09, or 5.3 percent, on the day but still above the offer price, indicating that shareholders expect a higher offer
Opposition to the deal has emerged, with at least three major shareholders, representing a stake of almost 19 percent, publicly opposing the deal. Icahn owns about a 16 percent stake in Lear. The deal is subject to shareholder approval.
The six purported class-action suits argue the merger agreement unfairly limits the process of selling Lear and that certain directors breached their fiduciary duties and acted with conflicts of interest in agreeing to the deal, according to Lear’s annual report filed with the Securities and Exchange Commission.
Three of the suits, filed in the Delaware Court of Chancery, were consolidated into a single action. The other three suits were filed in Michigan Circuit Court.
One of the lawsuits, filed in Delaware by Market Street Securities Inc., said Icahn’s affiliate “co-opted Lear management in its scheme to obtain special value for itself at the expense of the public shareholders.”
If the deal with Icahn’s affiliate is approved, Lear’s management would be retained and they would receive a bump in pay and bonuses.
Lear — which makes automotive seats, electronic and electrical systems and interior components — said it believes the lawsuits are without merit and plans to defend itself vigorously. Lear spokeswoman Andrea Puchalsky wouldn’t comment further on the lawsuits.
