Law360, June 26, 2015 article: "Harbinger Agrees To $3.7M Settlement In Stock Deal Suit" [Progress of litigation in another merger involving Schuff parent's chairman]
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DBM Global Incorporated

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Support of Minority Shareholder Interests

The Shareholder Forum had offered to support Appraised Value Rights ("AVR") of DBM (f/k/a Schuff International) minority shareholders in 2014 following a $31.50 per share tender offer by the company's controlling shareholder, HC2 Holdings, Inc., with the stated intent to proceed with a short-form merger "as soon as practicable.”

HC2 acquired DBM shares in the 2014 tender offer and other purchases bringing its total holdings to 92% of outstanding DBM shares, but has not proceeded with a merger. The Forum has continued to support the minority shareholder interests of its AVR participants in this context.



Participant distribution:

Progress of litigation in another merger involving Schuff parent's chairman


Note: The article below reports developments concerning a past merger transaction by a company controlled by the chairman of HC2, the parent of Schuff International, Inc., and does not relate directly to either HC2 or Schuff.


Source: Law360, June 26, 2015 article

Harbinger Agrees To $3.7M Settlement In Stock Deal Suit

By Ben Conarck  

LLaw360, Wilmington (June 26, 2015, 5:38 PM ET) -- Hedge fund manager Philip Falcone’s Harbinger Capital Partners LLC has agreed to pay $3.7 million to settle derivative claims that he orchestrated an unfair stock exchange between HCP and Harbinger Group Inc., a publicly traded firm under its control, according to Friday filings in Delaware Chancery Court.

In a Friday letter to Vice Chancellor John W. Noble, counsel for HGI shareholder Alan Kahn said that all parties have agreed to a settlement in principle as outlined in a memorandum of understanding. The MOU does not contain any admissions of wrongdoing.

Kahn, who filed the suit in 2010, had gone after the agreement struck between HGI’s board of directors, including Falcone, and the small holding company it allowed to acquire some of HCP’s shares in Spectrum Brands Holdings Inc., a consumer products company that sells household appliances and pet supplies.

“The settlement is subject (among other things) to confirmatory discovery, the drafting of definitive documentation, notice and court approval,” Kahn’s counsel Jessica Zeldin of Rosenthal Monhait & Goddess PA said in the letter. “The parties have undertaken in the MOU to use their best efforts to complete the confirmatory depositions in 45 days and execute a stipulation of settlement 14 days thereafter.”

HGI announced the deal at issue in September 2010, saying it would issue nearly 120 million shares of company stock to HCP in exchange for nearly 28 million shares of Spectrum Brands stock owned by HCP. The suit claimed HGI was “vastly overpaying” for the acquisition of assets from HCP, and that the transaction would boost HCP’s stake in HGI from 51.6 percent to 93.3 percent.

“As a result of the Spectrum Brands exchange, HCP will also receive a valuable benefit in its ability to effect a short-form merger without prior notice to or action by any other HGI shareholder,” the complaint said.

According to the memorandum of understanding, the parties had engaged in discovery after defendants filed answers to the complaint in November 2011, and eventually, despite failed efforts to resolve the action, mediation talks sprung back to life in March 2015.

Defendants in the action include Falcone, HCP, and directors Lawrence Clark Jr., Peter Jenson and Keith Hladek. The memorandum said that each defendant has denied and continues to deny “that he or it breached any fiduciary duty or otherwise engaged in any of the wrongful acts alleged in this action,” and stressed that the defendants are entering into the agreement “solely to eliminate the burden, expense and uncertainties of further litigation.”

In the letter, Zelden requested on behalf of all parties that in the meantime the case schedule be vacated.

An HGI representative declined to comment, and counsel for Kahn did not immediately return a request for comment on Friday.

Kahn is represented by Jessica Zeldin of Rosenthal Monhait & Goddess PA.

The defendants are represented by Stephen P. Lamb and Meghan M. Dougherty of Paul Weiss Rifkind Wharton & Garrison LLP.

The case is Alan Kahn v. Philip A. Falcone et al., case number CA6088, in the Court of Chancery of the State of Delaware.

--Editing by Mark Lebetkin.


© 2015, Portfolio Media, Inc.



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