Biotech is sued over deal

Shareholder objects to MedImmune sale

Chris Larson of San Diego has filed a class-action suit in Montgomery County Circuit Court, claiming the company violated the law in Delaware, where it is incorporated, by not seeking the ‘‘highest value reasonably available.”

Larson is seeking to block or invalidate the sale of MedImmune, Maryland’s largest biotech, to AstraZeneca Plc of London for $15.2 billion. He said the deal is illegal because the company planned to squeeze out public stockholders for ‘‘grossly inadequate consideration.”

The company leadership withheld details of the proposed acquisition from shareholders to obtain maximum financial gain for themselves, Larson claims in the lawsuit.

On April 23, AstraZeneca agreed to purchase MedImmune, Maryland’s largest biotechnology company with $1.3 billion in revenues for 2006 and 1,700 employees. The deal is expected to close next month. It was structured as an all-cash deal.

Company officers are not commenting on Larson’s claims, but spokeswoman Jamie Lacey said MedImmune will fight the lawsuit.

‘‘We believe the board and the company have acted in the best interest of shareholders and our willingness to accept AstraZeneca offer to buy,” Lacey said.

Another shareholder, David Katz, called Larson’s action a ‘‘frivolous annoyance suit” that does not represent other shareholders’ interests.

Katz had pressured the company’s board for several months to sell to a large pharmaceutical company. His firm, Matrix Asset Advisors, owns 0.7 percent of MedImmune stock.

Larson is not really unhappy, Katz said. ‘‘The stockholders got a wonderful price from the sale of the business.”

MedImmune stock was selling at $37 per share on April 11, the day before the company announced it would explore strategic alternatives, including a sale. AstraZeneca agreed to pay $58 per share.

Larson, Katz said, is probably just trying to garner a little cash by looking for a settlement from the company.

‘‘These suits pop up every time there is this kind of deal,” he said.

Such suits are common after corporate takeovers, said Frederick A. Provorny, a law professor at the University of Maryland.

The suit could snag the acquisition, as ‘‘time is of the essence in these deals,” he said. ‘‘The parties end up settling them and it could be used as leverage.”

If Larson’s suit proceeds, ‘‘it could hold up the deal,” Provorny said. He speculated that Larson may want to ‘‘sweeten the pot for shareholders in addition to demanding more information on the deal.” Larson’s request for a jury trial, if granted, would further delay the case, he said.

Neither Larson nor his attorney returned calls seeking comment.

Larson claims the sale was a self-dealing agreement among company insiders, with senior officers and directors cashing in for millions.

CEO David Mott, with 5 million shares, stands to make $287 million. Founder Wayne Hockmeyer, with nearly 2 million shares, would net $109 million. Both are listed as defendants in Larson’s suit. Other defendants are directors James H. Cavanaugh, Barbara Hackman Franklin, Elizabeth H.S. Wyatt, George M. Milne Jr. and Robert Hotz. They stand to make from $1 million to $14 million each in the deal.

The defendants possess ‘‘non-public information concerning the financial condition and prospects of MedImmune, and especially the true value and expected increased future value of MedImmune and its assets, which they have not disclosed to MedImmune’s public stockholders,” Larson claims.