Vulcan Materials Co. (VMC:US)’s founding family sued the 103-year-old gravel-maker and its top managers, accusing them of “gross mismanagement,” in part for rejecting a $4.7 billion sale to competitor Martin Marietta Materials Inc. (MLM:US)
Glenn Ireland II and William C. Ireland Jr. sued Vulcan’s board and Chief Executive Officer Don James, claiming that in addition to rejecting the Martin Marietta offer, they made a series of “disastrous, poorly vetted decisions” that loaded the company with too much debt and cut its value by more than half. The case was filed in state court in Birmingham, Alabama, on May 25.
Last year, after Vulcan’s board rejected its offer, Martin Marietta sued in state court in Delaware seeking approval to make a hostile bid. This month a Delaware Chancery Court judge halted the bid for four months, ruling that Martin Marietta violated a confidentiality agreement. Tomorrow, Martin Marietta lawyers are scheduled to ask the Delaware Supreme Court to overturn that ruling.
The Ireland family’s case is a so-called derivative lawsuit that would return any money won to the company’s coffers. The family is also seeking an order to force managers to restart negotiations with Martin Marietta.
“We believe the suit is entirely without merit,” Vulcan spokesman Jamie Tully said, declining to answer specific questions about the lawsuit or the rejected Martin Marietta deal.
Later this week, an Ireland family trust that owns about 1.5 percent of the company will join the Alabama lawsuit, said Guy K. Mitchell Jr., son-in-law of Glenn Ireland.
Other family members, many of whom still live in the Birmingham area, where Vulcan is based, back the lawsuit, Mitchell said.
In the Delaware lawsuit, James, the chairman of Vulcan, testified that in 2010 he had envisioned a friendly “merger of equals.” The talks foundered before Martin Marietta CEO Ward Nye disclosed the hostile bid, with a major sticking point being who would run the new company, Delaware Chancery Court Judge Leo Strine Jr. said in a 139-page opinion.
Martin Marietta, based in Raleigh, North Carolina, offered to exchange half a share for each share of Vulcan and pay a quarterly dividend equal to 20 cents a Vulcan share.
Glenn Ireland, 86, is one of four members of the family that took Vulcan public in a merger with Vulcan Detinning Co. in 1956. He had worked for several predecessor companies of Vulcan starting in 1947 and later served on the board. William Ireland is the son of one of the four founders of Vulcan Materials.
The Alabama case is Ireland v. James, CV 2012-901655, Circuit Court of Jefferson County, Alabama (Birmingham). The Delaware case is Martin Marietta Materials v. Vulcan Materials, CA7102, Delaware Chancery Court (Wilmington).
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