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Maryland company's lawsuit may not halt Heinz acquisition

A pair of lawsuits opposing the planned $28 billion acquisition of Heinz by 3G Capital Management and Berkshire Hathaway may not be enough to stop the deal, though they may be able to secure more money for shareholders. Maryland company, Hannon's Inc., and another investor file complaints arguing that the $72.50 share price negotiated by Heinz and its prospective buyers is an inadequate sum that was established due to "an unfair sales process."

Experts say that large-scale business sales and mergers are often met with such lawsuits. "Shareholders always want more money, and they want to ensure that the process was done fairly," explained one attorney who is not involved in the Heinz purchase. She said that the lawsuit will likely prompt Heinz, 3G and Berkshire to quickly resolve the issue in order to avoid delaying the deal.

According to the lawsuit, Heinz could have likely negotiated for a higher share price given that its stock was trading at $61 per share the week earlier, a record-high price for the company. However, the plaintiffs claim that Heinz refused to field offers from other potential buyers and actively discouraged other bids. Furthermore, the company reportedly agreed to pay Berkshire Hathaway and 3G a sum in the "tens of millions of dollars" in the event it rescinded on the deal in order to accept a better offer.

The plaintiffs have demanded that Heinz renegotiate the deal according to a "fair sales process" and pay their attorneys' fees. The lawsuit also asks a U.S. District Court to formally condemn the deal as unlawful. The defendants now have 45 days to either choose a process for establishing the value of Heinz's shares or agree on a price with the plaintiffs. If they fail to do so, they could face lengthy litigation.

However, experts say that such lawsuits are generally met with timely responses. One expert said she "would be shocked" if the companies do not settle the dispute and reach an agreement regarding the share price.

Source:, "Shareholder suits may not stop Heinz acquisition, expert says," Rich Lord, Feb, 19, 2013

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