3M Co. (MMM:US) agreed to pay $1.9 million to settle a lawsuit by shareholders who challenged the price it paid for Cogent Inc., a maker of fingerprint scanners.
The companies both denied any wrongdoing and will share the cost of settling the case, according to documents made public today in Delaware Chancery Court. 3M, whose products (MMM:US) include Post-It notes, flu tests and sanding tools, paid about $943 million in 2010 for Cogent, now called 3M Cogent.
“Defendants are entering into this settlement solely in order to eliminate the uncertainty, distraction, burden and expense of further litigation,” 3M and Cogent said in court papers.
Mergers and acquisitions lawsuits are the fastest-growing type of securities litigation, according to Cornerstone Research. Among deals of $100 million or more announced in the past two years, 91 percent were challenged in court, the legal research firm said in a report.
The settlement needs the approval of Judge Donald F. Parsons of Delaware Chancery Court, who will also decide how much of the $1.9 million goes to attorneys and how much to shareholders.
Investors claimed in the suit that Cogent Chief Executive Officer Ming Hsieh was biased in favor of 3M because he wanted to collect a $153,000 retention bonus.
Hsieh didn’t immediately return a voice-mail message requesting comment on the settlement. Jacqueline Berry, a spokeswoman for 3M, said she couldn’t immediately comment.
3M, based in St. Paul, Minnesota, agreed to buy Cogent for $10.50 a share. The sale closed in December 2010 after Parsons refused to halt the transaction.
The case is In Re Cogent Inc. Shareholders Litigation, Consolidated CA 5780-VCP, Delaware Chancery Court (Wilmington).
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