Automotive parts maker ArvinMeritor said on Tuesday it had filed a lawsuit against Dana Corporation for “misrepresentations” in statements concerning its rejection of ArvinMeritor’s $US2.2 billion bid, Reuters reported.
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The suit, filed in a US district court in Virginia on Friday, accused Dana of making statements and disclosures that are “materially misleading, fraudulent, deceptive or manipulative in violation” of Securities and Exchange Commission regulations, the report said.
Reuters noted that ArvinMeritor announced on July 9 it was offering $15 in cash for each share in rival Dana, which rejected the deal, saying it undervalued the company and was “risky”. The combination of the companies would create the third-largest US automotive parts maker, the news agency added.
A Dana spokesman told Reuters the company was aware of the suit and would respond shortly.
According to Reuters, ArvinMeritor in the suit asks that Dana be ordered to correct alleged mis-statements and be prevented from making future false statements or committing fraud.
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By GlobalDataArvinMeritor also criticised Dana for not making it clear why the company had set up a committee of independent directors to evaluate ArvinMeritor’s offer, the report added.
“Dana’s failure to disclose such a conflict, to explain that no conflict exists, or to otherwise explain why the independent committee was formed is a material omission,” the suit said, according to Reuters.
Reuters also reported that further details emerged on Tuesday on the surprise resignation last week of Deutsche Bank as one of Dana’s financial advisers.
According to the news agency, ArvinMeritor, in its suit, said Deutsche earlier this year told ArvinMeritor it could buy Dana at a price of up to $15 per share. However, Reuters added, in last week’s rejection, Dana said that Deutsche, along with Credit Suisse First Boston, had advised Dana that at $15 per share, the offer undervalued the company and it said Dana did not clarify this conflict of interest at Deutsche.
A Deutsche spokesman declined to comment to Reuters but a source familiar with the situation told the news agency Deutsche had based its earlier valuation on public information.
Once Deutsch was hired by Dana to defend it against ArvinMeritor, it was able to access more information on the company’s future prospects, the source told Reuters. However, Deutsche Bank quit its role as it did not want to get involved in any legal problems in case the hostile bid got more complicated, the source added, according to the news agency.
Reuters said that industry experts questioned what Dana’s next move would be.
Charles Brady, auto industry analyst with Credit Lyonnais Securities, told Reuters Dana management could either change course and decide to sit at the table with ArvinMeritor, accelerate its reorganisation to include other asset sales, or look to make an acquisition of its own.
