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Monday, November 18, 2019

Lawyers get $5.3M in settlement of investor class action against drugmaker AbbVie over scrapped Shire deal

Lawsuits

By Dan Churney | Oct 28, 2019

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Plaintiff attorneys are collecting $5.3 million for handling a class action against North Chicago-based drugmaker AbbVie, which alleged the company hid information that caused investors in a European company to lose millions after AbbVie pulled out of a merger with the company.

On Oct. 22 in U.S. District Court for the Northern District of Illinois, Judge Robert Dow Jr. approved a $16.8 million settlement, from which $5.3 million goes to the New York City firms of Wolf, Haldenstein, Adler, Freeman & Herz, which also has a Chicago office, and Gardy & Notis. The firms are receiving an additional $530,133 for costs pressing the case. 

These firms said their percentage of the settlement is not “excessive” and is in line with similar settlements.

The firms were lead counsel for a group of hedge funds and other investors, who sued AbbVie and its chief executive officer Richard Gonzalez in 2014 after AbbVie’s abortive merger with Irish pharmaceutical company Shire PLC. 

Plaintiffs said AbbVie withdrew from the $54 billion deal, after AbbVie learned its taxes would not be cut if it became a foreign corporation. AbbVie allegedly failed to not only disclose it might not go through with the merger if taxes would not be reduced, but Gonazalez spoke positively about the proposed merger a few weeks before the deal was abandoned.

Investors said they would not have continued putting money into Shire if they had known AbbVie might back out. As a consequence, investors said they took a bath when Shire’s stock price plummeted 30 percent in the two days after the proposed merger came unglued. They sued, alleging AbbVie breached the U.S. Securities Exchange Act.

For serving as lead plaintiff, Dawn Bradley is collecting $9,037 on top of her pro rata share of the settlement as a class member.

Other plaintiffs include Elliott International, the Liverpool Partnership, Tyrus Capital Event Master Fund and Tyrus Capital Opportunities Master Funds. 

Class members are those who acquired shares, bought call options or sold put options of Shire between Sept. 29 and Oct. 14, 2014. The settlement recognizes a loss of $50.69 per acquired share and notes more than 40 million shares were tradeable during the period. The dates mark when Gonzalez expressed confidence in the Shire purchase and when AbbVie announced it might not make the purchase. 

No class members registered objections to the settlement, court records showed.

More than two dozen investment companies and associated entities excluded themselves from the class, such as Goose Hill Capital and First New York Securities.

AbbVie officers during the class period and their relatives are among the groups automatically excluded from the class.

In agreeing to settle, plaintiff’s attorneys noted arguments they anticipated AbbVie might have put forth at trial.

Plaintiff said AbbVie might have argued they were not obliged to announce the merger was still under evaluation, before announcing their final decision. Defendants might also have contended Gonzalez’s positive remark about the merger, shortly before calling off the deal, was not intended as an official statement.

In response, plaintiffs said they would allege Gonzalez should have known his remark would be misleading and his alleged failure to correct that misleading impression showed alleged intent to deceive.

AbbVie is represented by Kirkland & Ellis, of Chicago.    

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Organizations in this Story

Kirkland & Ellis LLPGardy & Notis LLPU.S. District Court for the Northern District of IllinoisAbbvieWolf Haldenstein Adler

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