Toward the end of 2011, a class-action lawsuit was filed against Pharmaceutical Product Development, Inc., or PPD, a company based in Wilmington. According to its website, PPD is a “global contract research organization providing drug discovery, development and lifecycle management services,” to its clients, which include “pharmaceutical, biotechnology, medical device, academic and government organizations.”
At the time the suit was filed, its aim was to prevent two private equity firms, the Carlyle group and Hellman & Friedman, from purchasing PPD. The acquisition proceeded despite the lawsuit.
The plaintiffs alleged that the offering price for the company was too low and that a breach of fiduciary duty would occur on the part of PPD’s officers and directors in accepting the proposed bid.
The equity firms offered $33.25 per share; however, analysts speculated the company was worth as much as $38 per share.
The settlement requires the equity firms to pay $450,000 in fees to the plaintiffs’ law firm. It does not include damages for the primary plaintiff, the York County Employees’ Retirement Board, though. The pension fund held an interest in the company valued at $263,000 by the equity firms’ offer, totaling 7,900 shares.
The shareholders’ suit centered on the expectation that companies that engage in clinical research, like PPD, would expand and have increased profits in the near future. The plaintiffs contended that PPD’s stock price would rise, as a result. They also argued that the firms’ offer to acquire PPD provided such sizeable financial benefits for its officers that it prevented them from acting in the shareholders’ best interests.
Source: Triangle Business Journal, “Settlement reached in PPD shareholder suit,” Chris Bagley, June 18, 2012.