Proxy statement reveals deal on pair of legal actions
Plaintiffs in a pair of suits seeking to block the pending sale of Warner Music Group to Access Industries have agreed to settle, according to information buried in last week’s WMG proxy statement.Settlement was undertaken “primarily to avoid the substantial burden, expense, inconvenience and distraction of continued litigation and to fully and finally resolve all of the claims and allegations in those actions,” according to the June 13 WMG SEC filing. A vote on approval of Access’ $3.3 billion purchase is set for a special meeting of WMG shareholders in New York on July 6. Preliminary agreement, which must be court approved, covers a May 12 class action filed in Delaware Chancery Court by shareholder Barbara A. Varipapa and a May 19 class action lodged in New York Supreme Court by stockholder Derek Cournoyer. Both suits alleged that the per-share price offered by Access was insufficient, and that the WMG board breached their fiduciary duty by failing to accept a higher bid for the company. Cournoyer’s suit additionally noted that Access principal Len Blavatnik had a long history on the WMG board, and that the board had lowered the vesting price on restricted shares granted to WMG chairman/CEO Edgar Bronfman, Jr., during the sale process, setting up a $13.6 million stock windfall for Bronfman. (Variety, May 25). Under the terms of a memo of understanding executed June 8 by attorneys for Varipapa and Cournoyer, a full stipulation of settlement will be finalized no later than July 19. It will apply to all members of the shareholder class, and will release WMG from all claims. Varipapa’s counsel will file a voluntary notice of dismissal upon final court order of the settlement. WMG’s proxy statement refers to a third class action filed June 3 in New York Superior Court by shareholder Vikas Dahivadkar, who recapitulated most of Cournoyer’s allegations. Document says that Dahivadkar’s attorneys “have indicated that they do not object to the (memo of understanding),” but says nothing further about disposition of that suit. WMG denies all liability with respect to the allegations of all three actions in the proxy document.