Biotech Values

[DewDiligence]

Cima Sues AaiPharma Over Merger Fees

[Apropos to our thread…]

http://biz.yahoo.com/ap/040811/cima_aai_1.html
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Wednesday August 11, 7:15 pm ET

Cima Labs Sues Former Merger Partner AaiPharma to Recoup $17 Million in Fees

EDEN PRARIE, Minn. (AP) -- Cima Labs Inc. on Wednesday said it filed a lawsuit to recover nearly $17 million in fees relating to the breakup of its acquisition by AaiPharma Inc., which is currently under investigation by regulators regarding its sales practices.

The lawsuit, filed in Minnesota's Hennepin County District Court, alleges fraud and breach of contract relating to the merger agreement the companies entered Aug. 5, 2003. Cima hopes to recover $11.5 million it paid AaiPharma as part of a contractual merger break-up fee, as well as $5 million in other costs.

Cima originally had agreed to be acquired by AaiPharma last August in a deal valued at $360 million. However, the agreement to merge kicked off a takeover battle for Cima with rival Cephalon Inc. and a mystery bidder.

After originally rejecting Cephalon's bid, Cima agreed to be bought by Cephalon in a deal valued at $515 million. The acquisition was approved by federal regulators earlier this week, and ended a year-long saga on Wall Street regarding about who Cima would agree to be taken over by.

Cima contends it never would have pursued a deal had it known AaiPharma launched an internal investigation into sales practices last March. [Sounds like a reasonable argument.]

"Had AaiPharma's financial results as restated been public, we would not have entered into a merger agreement with the company," said Cima chairman and interim chief executive Steven Ratoff in a statement. "Under the circumstances, we believe it is appropriate to seek recovery of the break-up fee and recoup the significant fees and expenses we incurred in connection with negotiating the transaction."

Shares of Cima closed up 1 cent, or 0.03 percent, at $33.98, AaiPharma closed down 49 cents, or nearly 16 percent, at $2.62 -- and continued its slide in the after-hours session, recently changing hands at $2.45 -- and Cephalon closed down 45 cents, or 1 percent, at $42.55. All trade on the Nasdaq.
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