Heinz shareholders sue to try to halt purchase of company

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Attorneys from Pittsburgh, San Diego, Atlanta and Boulder, Colo., sued late Friday on behalf of two H.J. Heinz Co. shareholders in an effort to stop the purchase of the company by Berkshire Hathaway Inc. and 3G Capital Management LLC.

The attorneys, representing the Maryland company Hannons Inc. and California man James Clem, wrote in two separate complaints that the $72.50 per share price negotiated for Heinz shares was "an unfair price" stemming from "an unfair sales process."

"The [Heinz] board and company management support the proposed acquisition in order to secure liquidity for their illiquid holdings in the Company," the attorneys wrote. "From the sale of their illiquid block of shares in the proposed acquisition, the Board and Company management will receive more than $400 million."

Such lawsuits are a regular feature of large corporate acquisitions and mergers.

The complaints note that Heinz stock was trading at "an all-time high of $61 per share" a week earlier. They suggested that a price better than $72.50 could have been obtained, except that Heinz management would not communicate with any other potential bidders, took other steps to discourage competing offers, and agreed to pay a "termination fee" of "tens of millions of dollars" if the food company opts to accept "a superior proposal."

The lawsuits in U.S. District Court seek a declaration that the proposed acquisition is unlawful, a requirement that any purchase of Heinz come through "a fair sales process," and payment of attorneys fees.

Representing Hannon's and Mr. Clem are Pittsburgh attorney Alfred G. Yates, and the San Diego firm Robbins Geller Rudman & Dowd. Representing Hannon's only is Kip B. Shuman of Boulder. Representing Mr. Clem only is Corey D. Holzer of Atlanta.

A Heinz spokesman declined comment. Spokesmen for co-defendants Berkshire Hathaway and 3G Capital could not be reached. Other defendants include Heinz executives and board members.

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Rich Lord: rlord@post-gazette.com, 412-263-1542 or Twitter @richelord


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