Largest Customer Buys Supplier, Gets a Class Action As a Bonus

Shareholders of Intermagnetics General Corp. (NASDAQ: IMGC), a leading designer and manufacturer of magnetic resonance imaging (MRI) medical devices, have filed two class action complaints challenging the proposed $1.3 billion sale of Intermagnetics to Philips Holding USA Inc., a subsidiary of Koninklijke Philips Electronics N.V. (NYSE: PHG).

According to a 10-K filed last week by Intermagnetics, the complaints, filed in the Supreme Court of the State of New York for Albany County, allege that:

the directors of Intermagnetics breached their fiduciary duties, including by failing to publicly announce an open bidding process or otherwise seek additional offers to acquire Intermagnetics, and by failing to provide full disclosure of certain material financial information.

The complaints also allege that:

Intermagnetics (and, in one of the complaints, Philips) aided and abetted these alleged fiduciary violations. The plaintiffs seek equitable relief, including an injunction preventing us from proceeding with or consummating the merger.

Regular readers can guess what comes next:

Intermagnetics believes that these allegations are without merit and intends to contest them vigorously.

That's right, a close cousin of the "vigorous defense," the "vigorous contest."

The Albany Times Union has a story on the litigation here and The Business Review (Albany) has a story here.

The Times Union story indicates that the Albany law firm of O'Connell and Aronowitz is counsel for plaintiffs in both cases. Given the realities of securities litigation, it is likely that the firm is acting as local counsel for other more established members of the plaintiffs' bar. An attempt to review the dockets through the New York State Unified Court System's E.Court System proved fruitless.

Daily Trivia: Dr. Raymond V. Damadian is generally considered to be the father of MRI, though he was snubbed in 2003 when Paul Lauterbur and Sir Peter Mansfield were awarded the Nobel Prize in Medicine for their discoveries concerning MRI. Following the snub, Dr. Damadian took out this full-page advertisement in a number of newspapers, including the New York Times.