WILMINGTON, Del., Jan. 20, 2015 /PRNewswire/ -- Settling a nearly two-year-old shareholder class action, directors and officers of investment bank Jefferies Group, Inc. and New York-based holding company Leucadia National Corporation have agreed to provide a net recovery of $70 million to shareholders who challenged the terms of the 2012 stock-for-stock buyout of Jefferies by Leucadia. The settlement, which was reached just weeks before trial was to begin, provides a cutting edge payment structure and a rare victory for shareholders challenging a stock-for-stock M&A transaction.
The settlement stipulation was filed late on Friday, January 16, 2015, in Delaware Chancery Court and is subject to approval by the Court. Law firms Grant & Eisenhofer P.A. and Bernstein Litowitz Berger & Grossmann LLP, together with others, represent lead plaintiff institutional investors Laborers' District Council Pension and Disability Trust Fund No. 2, Genesee County Employees' Retirement System and Oklahoma Firefighters Pension & Retirement System on behalf of the class of Jeffries shareholders.
The plaintiffs' complaint alleged that Jefferies' then-CEO and current Leucadia CEO, defendant Richard Handler, and Jefferies' President, defendant Brian Friedman, negotiated the Jefferies-Leucadia merger for over four months with Leucadia's co-founders, defendants Ian Cumming and Joseph Steinberg, before notifying the Jefferies board of the potential deal. Under the terms of the Nov. 11, 2012, merger agreement, Leucadia acquired the shares of Jefferies common stock that it did not already own in exchange for providing Jefferies stockholders with 0.81 Leucadia shares for each of their Jefferies shares. Plaintiffs alleged that in breach of their fiduciary duties, Handler and Friedman negotiated the stock-for-stock transaction using an exchange ratio that undervalued Jefferies and gave its shareholders an inadequate percentage of the combined company.
The settlement ensures that a net payment of $70 million, consisting of either cash or stock, will be made directly to former Jefferies stockholders who exchanged their shares with Leucadia. Besides its significant magnitude in dollar terms, the settlement is cutting edge in that the $70 million in consideration constitutes a sum certain being paid to shareholders and will not be affected by any legal fees or settlement expenses, which defendants will cover and will be a separate matter addressed by the Court.
"From the outset, we believed this deal was infected by significant conflicts of interest," said Mark Lebovitch, a partner with Bernstein Litowitz. "We had a clear strategy for prosecuting this case, and we executed that strategy with skill and determination, positioning the Class to achieve this significant result."
"Particularly in Stock-for-Stock mergers, post-closing recoveries are exceptionally rare and challenging," said Stuart Grant, managing director at Grant & Eisenhofer. "The $70 million recovery, on top of the 24% premium already provided in the deal, is an outstanding result for Jefferies stockholders."
The case caption is: In Re Jefferies Group, Inc. Consolidated Shareholders Litigation, C.A. No. 8059-CB, Del. Court of Chancery.
The Jefferies recovery comes on the heels of last week's announced settlement in In re Freeport-McMoran Derivative Litigation, [C.A. No. 8145-VCN], in which G&E and BLB&G lead the legal team that achieved a gross settlement of $137.5 million, which will be paid out to Freeport shareholders in the form of a special dividend, after payment of fees and expenses. Through these two cases alone, G&E and BLB&G have achieved in excess of $200 million in settlement funds on behalf of shareholders.
About Grant & Eisenhofer
Established in 1997 Grant & Eisenhofer has become one of the nation's top litigation firms representing institutional investors in securities actions, corporate governance disputes, appraisal litigation, M&A challenges and other cases holding large corporations and boards of directors accountable. The firm has more than 70 attorneys, with offices in Wilmington, New York, Washington D.C., and Chicago, and an international docket of high-profile cases.
G&E's clients include institutional investors, whistleblowers and other stakeholders in securities class actions, derivative lawsuits, consumer class actions, antitrust suits, bankruptcy litigation and whistleblower cases involving the False Claims Act. The firm has recovered more than $28 billion in the last 10 years and consistently has been cited by RiskMetrics for securing the highest average investor recovery in securities class actions. Grant & Eisenhofer has been named one of the country's top plaintiffs' law firms by The National Law Journal for the past ten years. G&E was recently named one of the nation's Most Feared Plaintiffs Firms by Law360. For more information, visit www.gelaw.com.
About Bernstein Litowitz Berger & Grossmann LLP
Bernstein Litowitz Berger & Grossmann LLP is one of the leading law firms worldwide advising public pension funds and institutional investors on securities litigation, corporate governance and shareholder rights issues. Unique among firms specializing in the representation of institutional investors, the firm has obtained five of the ten largest securities recoveries in history and over $27 billion on behalf of investors since its founding in 1983. Regularly entrusted by its clients and appointed as lead counsel by the courts in major securities class actions, BLB&G has litigated numerous seminal cases establishing precedents which have increased market transparency, held wrongdoers accountable, and changed corporate business practices in groundbreaking ways.
Widely recognized by industry observers for its legal excellence and achievements, BLB&G was selected the top plaintiff firm in the nation by Benchmark Litigation; is credited for "consistently achieving the highest returns for investors" (The National Law Journal); is noted for giving "the best advice in the field" (Chambers USA); was named one of the Most Feared Plaintiff Firms in the nation by Law360; and was again ranked the #1 firm in the field by Securities Class Action Services (SCAS) in 2014, where it is at or near the top of the rankings every year – often with the highest total recoveries, the highest settlement average, or both. BLB&G has offices in New York, California, Louisiana and Illinois. Visit http://www.blbglaw.com to learn more.
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SOURCE Grant & Eisenhofer P.A.; Bernstein Litowitz Berger & Grossmann LLP