Delaware case paused on Bear Stearns: JPMorgan deal
A Delaware Chancery Court judge on Wednesday decided to temporarily pause a lawsuit that sought to challenge JPMorgan Chase & Co’s (JPM.N: Quote, Profile, Research) planned takeover of Bear Stearns Cos Inc (BSC.N: Quote, Profile, Research) since a similar case was moving forward in New York.
The investment banks had argued that fighting simultaneous lawsuits in Delaware and New York would be wasteful and burdensome.
Vice Chancellor Donald Parsons said he granted the companies’ request to stay the case in Delaware for several reasons, including that a hearing had already been scheduled for May 8 in the New York case. A copy of Parsons’ decision, dated April 9, was obtained by Reuters.
The plaintiffs, the Police and Fire Retirement System of the City of Detroit and the Wayne County Employees’ Retirement System, are Bear Stearns shareholders.
The funds said Bear Stearns’ directors violated their fiduciary duties in agreeing to the JPMorgan deal and should be forced to look for higher offers.
JPMorgan initially agreed to buy Bear Stearns for $2 per share, but later raised the offer to $10 per share http://payday-faxless.com. The deal, currently valued at about $1.7 billion, was struck last month as Bear Stearns faced a cash crunch and the possibility of imminent collapse.
The judge said the Michigan funds had previously sought a temporary restraining order on JPMorgan’s purchase of 39.5 percent of Bear Stearns on April 8, but later abandoned that request. Instead, the funds sought a preliminary injunction preventing JPMorgan from voting any of those newly acquired shares, the judge said.
At a court hearing on March 31, the plaintiffs “focused most, if not all their attention on the (defendant’s) motion to stay” the case, Parson said. As a result, he addressed only the arguments for and against a stay.