Just when we thought the ImClone Systems buyout drama was over, shareholders are mounting their own major production. A pension fund, the State-Boston Retirement System, has sued putative buyer Eli Lilly, along with ImClone and its directors, claiming that the biotech's board didn't live up to its fiduciary duty. And the suit is pursuing class-action status to get other shareholders in on the fight.
The suit lambastes the $70-a-share Lilly/ImClone deal as "the result of a hopelessly flawed process" and claims that ImClone's board "failed to provide ImClone's shareholders with material information to make an informed decision as to whether to tender their shares," the companies disclosed in SEC filings. Both Lilly and ImClone say the suit is "without merit;" Lilly intends to "vigorously defend" its deal.
You'll recall that ImClone's Erbitux partner Bristol-Myers Squibb started off the bidding with a $60-per-share offer, which it eventually raised to $62. But ImClone Chairman Carl Icahn swept in with Lilly's $70 bid, Bristol bowed out, and the deal appeared to be done. Does the pension fund expect to get more than $70? We'll keep you posted.