NEW YORK, Feb 16 – In its lawsuit against Genomic Solutions, PerkinElmer has alleged that Genomic Solutions entered a “sham” proposed merger transaction in order to prevent PerkinElmer from being able to execute its call rights to acquire all of Genomic Solutions shares, according to documents PerkinElmer filed in Delaware Chancery Court.
“GSI and its directors repeatedly have sought to construct and implement a sham transaction for the purpose of frustrating plaintiff’s contract rights,” states a motion obtained by GenomeWeb.
“The verified complaint alleges with particularity that the defendants, GSI and its directors, in breach of their contractual and fiduciary duties, are proceeding in a completely uninformed fashion to enter into a letter of intent for a proposed merger transaction purposefully structured to impede plaintiff’s rights.”
PerkinElmer said that Genomic Solutions, an Ann Arbor, Mich.-based maker of of microarrays and proteomics tools, is conducting merger talks with EXI, Inc. PerkinElmer said that Genomic Solutions proposed to merge with EXI into a new shell corporation in such a way that would impede PerkinElmer from executing its call rights for all shares of Genomic Solutions that it does not already own.
PerkinElmer, a $1.7 billion company based in Boston, said that this is the second time since November 2000 that GSI has attempted to conduct such a transaction.
Neither Genomic Solutions, PerkinElmer, nor its lawyers were immediately available to discuss the claims or details about EXI. On Thursday, Genomics Solutions said it moved for summary judgment of the lawsuit.
The lawsuit, which was filed against Genomic Solutions, its CEO, and its directors, stems from a deal penned last April. Under the terms of that dea, Perkin Elmer, which currently holds 1,269,841 shares, or about 5 percent of Genomic Solutions equity, was given the right to buy all of the company’s remaining shares in cash based on the highest of the following three prices: the previous day’s closing price, plus 20% of that price; the 30-day trading average; or a flat $6.75 a share.
Genomic Solutions shares closed at 7 15/16 on Thursday.
PerkinElmer, which has the right through October 2002, now claims that Genomic Solutions is trying to sabotage the deal through a proposed merger.
“Under the relevant contractual provisions, only five business days would separate the tender of the sham transaction to plaintiff and the requirement that plaintiff commit either to exercise its right at a time when it would not otherwise be contractually obligated to do so, or risk losing forever its right to acquire the remaining shares of GSI it does not currently own,” PerkinElmer claims.
In an earlier interview with GenomeWeb, Steve Richvalsky, Genomic Solutions chief financial officer, would not say why his company agreed to such a deal, but noted the significance of another deal secured at the same time.
“There were two agreements, separate and distinct, but it was strategically important to distribute and market our products and services,” he said.
PerkinElmer also markets and distributes Genomic Solutions' products in all countries except for the US, Japan, and United Kingdom, contributing to about 14 percent of Genomic Solutions' sales in 2000.
When asked whether this meant that Genomic Solutions in effect had made a trade-off, granting PerkinElmer the “callable common stock” in return for the distribution and marketing arrangement, Richvalsky said, “I’ll leave that up to you to decide.”