Legal News

Surprise! Lawsuit Challenges NYSE-Deutsche Boerse Tie-up

By Ashby Jones

Stop the presses. Hold our calls. Clear some room on the front page. A lawsuit was filed shortly after the announcement of a big merger.

Now that kind of thing doesn’t happen every day.

Yes, LBers, we’re being sarcastic. The truth is that these kinds of lawsuits get filed, if not every day, then practically every other day — a phenomenon Dionne Searcey and I tackled in this piece last month.

The latest, as reported by the WSJ’s Chad Bray: A Louisiana pension fund that has pushed for a higher sale price in other mergers has sued to block NYSE Euronext’s acquisition by Deutsche Boerse.

The Louisiana Municipal Police Employees’ Retirement System, in a lawsuit filed in New York state court in Manhattan on Friday (click here for the complaint), alleges the transaction fails to deliver a “fair price” to NYSE’s public shareholders. The lawsuit also claims the merger agreement includes “unreasonable and draconian” provisions designed to discourage competing bids.

“In light of Defendants’ breach of their fiduciary duties in agreeing to an unreasonably low price for the sale of the NYSE and agreeing to unreasonable and draconian deal protections, plaintiff is entitled to enjoin the proposed transaction or, alternatively, to recover damages in the event the proposed transaction is consummated,” the lawsuit said.

The Louisiana fund previously sued in 2007 to block the Chicago Mercantile Exchange’s bid for the Chicago Board of Trade, saying CBOT’s board didn’t get the best possible deal for shareholders. The litigation was settled after CME’s bid was increased.

A NYSE Euronext spokesman declined to comment Monday. Deutsche Börse declined to comment as well.

Full post as published by Law Blog - WSJ.com on February 28, 2011 (boomark / email).