The hedge fund actually filed the case in Germany, the country to where the suit is alleging laws were violated. With this acquisition we now have one of the largest drug distributors in the world with over $150 billion in annual revenue with operations in 20 countries. The hedge fund said McKesson should have offered to pay more in additional compensation of minority share holders and bond holders with Celesio.
“If McKesson’s transaction is allowed to stand without addressing the divergent prices paid to different shareholders, this precedent would upend safeguards designed to ensure fair treatment of all shareholders in corporate takeovers in Germany,” the hedge fund said.”
In short one investor appears to have been favored over others, Elliott Management. BD
The hedge fund Magnetar Capital sued a subsidiary of the McKesson Corporation on Wednesday in connection with its acquisition of the German drug wholesaler Celesio, contending that McKesson violated German takeover law by paying more to some holders of Celesio’s convertible bonds than it did to shareholders.
Magnetar filed the lawsuit in the district court of Frankfurt on behalf of four funds it manages. It contends that McKesson agreed to pay Elliott Management and its affiliates the equivalent of 30.95 euros a share, or about $42.35, for Celesio’s convertible bonds to get enough shares to push the deal through. Magnetar and other shareholders were paid €23.50 a share for their holdings and are entitled to an equal amount under German law, according to the suit.
In October, McKesson announced that it had acquired a controlling stake in Celesio from Franz Haniel & Cie., the majority shareholder, and planned to start a tender offer for the remaining shares.
But, McKesson fell short in January of the 75 percent of the company’s outstanding shares and convertible bonds for the deal to proceed.
It increased its tender offer for Celesio at the last minute after weeks of vocal criticism by Elliott Management, a hedge fund in New York founded by Paul E. Singer.