Lawsuits challenging Heinz takeover dismissed

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Seven shareholder lawsuits over the proposed $28 billion takeover of H.J. Heinz were dismissed Monday, clearing one of the final hurdles to the sale of a company that has been a Pittsburgh fixture since 1859.

Allegheny County Common Pleas Judge Christine A. Ward approved the request of Heinz to dismiss the lawsuits after more than two dozen attorneys representing shareholders, Heinz and the buyers crammed her courtroom for a 2 1/2 hour hearing Monday morning.

The lawsuits alleged the Heinz directors who negotiated and approved the deal violated their fiduciary duties to shareholders by not pursuing other offers and by agreeing to pay Berkshire Hathaway and 3G Capital, Heinz's proposed buyers, $750 million if they accept an offer from another bidder.

The largest remaining hurdles are a vote by Heinz shareholders, scheduled for this morning in New York, and regulatory approvals, including action by regulators from the European Union and China.

"We are pleased with today's decision and we look forward to [today's] shareholder meeting where we expect Heinz shareholders to overwhelmingly approve this historic transaction and its record valuation of Heinz," Heinz spokesman Michael Mullen said.

Berkshire and 3G, a New York private equity firm, are offering Heinz shareholders $72.50 cash for their shares. The $28 billion price tag includes about $5 billion in Heinz debt the buyers will assume.

Since Judge Ward dismissed the case, she did not issue a ruling on a motion by attorneys for shareholders to postpone today's shareholder vote for 30 days.

Shareholder attorneys asked the judge to delay the vote and to modify some provisions of the sales agreement they contended have prevented other buyers from coming forward; including the $750 million fee Heinz agreed to pay if it accepted another offer.

Berkshire's and 3G's insistence on those provisions resulted in "a fundamentally unfair process that was dictated by the buyers," Joseph M. Profy, a Berwyn, Pa., attorney who represented shareholders, told the judge at the hearing.

Attorney Scott B. Luftglass, representing Heinz, told the judge that three investment bankers who advised Heinz directors of the offer said it was unlikely anyone else would make an offer. He said their opinion was confirmed by what's happened since the transaction was announced Feb. 14.

"No one has come forward," Mr. Luftglass said.

An attorney for Berkshire said a delay would jeopardize a sale that will be good for Pittsburgh, citing the buyer's promise to keep Heinz's headquarters in the city. Heinz employs about 1,200 in the region.

"That's an extraordinary and positive feature of this transaction," George M. Garvey told Judge Ward. "Most acquirers do not make commitments like that."

Mr. Luftglass told Judge Ward that a committee of Heinz directors appointed to investigate the negotiations thoroughly reviewed the offer and concluded the $72.50-per-share offer is in the best interests of shareholders.

Brett D. Stecker, another shareholder attorney, questioned whether one Heinz director on the committee, former U.S. Steel chairman and CEO Thomas J. Usher, could render an independent opinion on whether the offer is good for shareholders because he was also on the board committee that negotiated the transaction. He also said the involvement of Heinz director Michael F. Weinstein, another member of the committee that reviewed the offer, was also troublesome because Mr. Weinstein benefited from past business dealings with Heinz director Nelson Peltz, who was also on the negotiating committee.

Judge Ward agreed April 2 to consolidate nine separate lawsuits filed in Common Pleas Court over the Heinz sale. Shareholders who filed two of those lawsuits subsequently asked them to be dismissed.

Two lawsuits filed by shareholders in federal court Downtown also were dismissed at the request of attorneys for shareholders.

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Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.


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