NEW YORK (GenomeWeb News) – Eurofins and Operon Holdings are engaged in a legal dispute over Operon’s financial obligations to the Eurofins Genomics venture that was formed through a combination of certain of their businesses in November 2007.
Eurofins Genomics was formed through a combination of Eurofins’ subsidiaries MWG Biotech and Medigenomix with Operon Biotechnologies. Under an agreement between Eurofins and Operon Holdings, Eurofins Ventures was obligated to provide $10 million in funding to the venture, while Operon was to contribute $5 million in cash.
Eurofins, with headquarters in Breda, The Netherlands, filed suit in the US District Court for the District of Delaware on Aug. 1 against Operon Holdings and two executives of the firm for allegedly failing to make a required $1.3 million payment to the Eurofins Genomics venture. The Dutch firm said that since Operon officials subsequently “refused to provide Eurofins Ventures with assurances that it intended to pay the undisputed amount due under the contribution agreement and related documents,” it exercised its rights to satisfy the payment through the issuance of a portion of Operon’s shares in the venture.
According to Operon’s motion to dismiss the case, filed on Aug. 22, Eurofins’ letter stated that because of the reduced stake in the venture, Operon was no longer entitled to representation on the Eurofins Genomics board. Operon’s CEO Patrick Weiss is on the board of the venture, pursuant to the contribution agreement.
Eurofins asked the court to declare that the dispute between the firms is arbitrable, according to terms of the contribution agreement — or, if it decides the dispute isn’t arbitrable, then it asked the court for “substantive relief” for Operon’s alleged breach of contract.
However, Operon argues that the court should dismiss Eurofins’ complaint “because there is no ripe, actual controversy concerning the arbitrability of any dispute between the parties.” According to its filing, Operon said the court could not rule on the matter because a contractually mandated 60-day negotiation period has yet to expire, and Eurofins filed its suit midway through that period.
“Eurofins seeks to avoid this condition precedent to arbitration by claiming that Operon has unequivocally refused to arbitrate any aspect of the parties’ dispute,” Operon stated in its motion to dismiss. “This allegation is inaccurate, and Eurofins’ attempt to obtain a declaratory judgment on arbitrability is premature.”
Furthermore, Operon disclosed that prior to being contacted by Eurofins in late June about its financial obligations, Eurofins Genomics was notified that it was in default on debt payments to Eurofins Finance, a Eurofins affiliate that committed to loan up to $20 million to the venture. Eurofins Finance demanded a payment of over $14 million from the venture on June 11, according to Operon.
In a July 10 letter to Eurofins, Operon discussed what it viewed as the misuse of its $5 million capital contribution to the venture, and the alleged failure by Eurofins to allow Eurofins Genomics to use available resources to service its debt.
Operon also alleged in its filing that Eurofins has misused statements made at a settlement conference between the firms at the end of July and has misrepresented what was said at the meeting. In addition to seeking a dismissal of the case, Operon said that the two executives who are named as defendents, Weiss and James Hudson, “may themselves have claims to be asserted against Eurofins.”
Eurofins has until Oct. 2 to respond to Operon’s motion to dismiss the case.