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Titanium Metals investors file suit over USD 3 billion buyout
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Sunday, 18 Nov 2012
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Bloomberg reported that Titanium Metals Corporation’s USD 2.9 billion acquisition by Precision Castparts Corporation was engineered by billionaire Mr Harold Simmons Titanium Metals’ controlling shareholder to get around an earlier settlement of claims about Simmons’s company related dealings.

Lawyers for the Sunshine Wire & Cable Defined Pension Benefit Plan said that Mr Simmons and other Titanium Metals executives didn’t solicit other bids for the maker of titanium used in the aerospace industry and set up the buyout by Precision Castparts, maker of jet-engine parts to avoid certain obligations that members of the company’s board are obligated to undertake pursuant to the settlement.

According to the company’s November 9 statement about the deal, under the offer, stockholders of Dallas based Titanium Metals will get USD 16.50 per share, a 44% premium. Entities controlled by Simmons have agreed to sell their 45% stake in the company known as Timet.

The deal, Precision Castparts’ largest since at least 1995 extends an acquisition spree under Chief Executive Officer Mr Mark Donegan who has overseen more than two dozen purchases in the past decade. Planemakers Boeing Company and Airbus SAS have urged suppliers to consolidate to help support record increases in jet output.

A Louisiana pension fund sued Mr Simmons and other Timet executives in Delaware last year accusing them of engaging in a half dozen self dealing transactions including below market rate loans made by the company to firms controlled by the Texas billionaire and cost sharing arrangements.

Timet officials agreed last month to settle shareholder derivative claims against Simmons and the rest of the company’s board by agreeing to toughen the company’s oversight policies regarding so called related party transactions.

According to the filing, a committee of independent directors also will review challenged transactions from the past and issue a report on them by January 31 that will be published in the company’s proxy statement.

Delaware Chancery Court Judge Leo Strine is slated to have a final approval hearing on the settlement of the derivative suit filed by the Louisiana pension fund on January 9 in Wilmington.

Lawyers for the Sunshine Wire pension fund contend that Simmons and other Timet executives pushed to sell the company to Precision Castparts, one of the company’s largest customers, to avoid having to comply with the settlement’s requirements, according to the November 13 suit.

The lawyers said that the proposed acquisition is thus, a sham and or fraudulent transaction, a primary if not sole purpose of which is to avoid the obligations of the settlement.

Lawyers for the Sunshine Wire pension fund noted the settlement papers for the earlier case didn’t mention a potential buyout and the suit over Precision Castparts’ acquisition isn’t covered by the accord.

Source - Bloomberg

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