Investors Seek Injunction To Block $1B Sale To Konica Minolta.

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Date: Thursday August 17, 2017 11:41:36 am
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    Investors Seek Injunction To Block $1B Sale To Konica Minolta.
    Ambry Genetics Investors Seek To Block $1B Sale To Konica.
    By Jeff Montgomery.

    Wilmington (August 15, 2017) — Ambry Genetics Corp. investors sought a preliminary injunction late Monday to enjoin the company’s $1 billion sale to Konica Minolta Inc., immediately after filing a sealed putative class challenge to the deal and the company’s management in Delaware’s Chancery Court. 
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    Although attorneys have yet to release a public version of the suit, a related summary filing alleged “breaches of fiduciary duty by the controlling stockholder and board of directors,” and said the suit accused directors of aiding and abetting violations of Delaware corporation law in connection with the proposed sale.

    Comment was not immediately available from Ambry.

    Lead class member George Harrison Hamil also sued Ambry in June, demanding access to company books and records for what was then described as an investigation of the company’s management, value, control, benefits to directors and reports of ongoing sale efforts.

    By late Monday, class attorneys were seeking expedited action on the case in support of the preliminary injunction. Public portions of the suit also detailed class requests for records, many involving facts about the proposed sale, alternatives considered and advice provided.

    Ambry specializes in genetic testing and analysis and cancer detection. In July, Japanese technology company Konica Minolta announced an agreement to buy Ambry for up to $1 billion, in what Konica described as an effort to become a precision medicine leader.

    Among the specific records requests filed with the suit were calls for "documents concerning any communication by Charles Dunlop concerning any potential sale, merger, acquisition or business combination involving Ambry's stock or any of Ambry's assets or businesses.”

    Dunlop is Ambry’s president and chairman and controlling investor. In the earlier books and records dispute, Hamil said stock grants the board of directors gave themselves in 2015 and 2016 at discounted rates might have been tied to a plan to give Dunlop control of the company.

    “Put simply, the demand details self-interested actions taken by the board in connection with the director stock grants which warrant further investigation,” the earlier complaint said.

    In correspondence included with the filing of Monday's suit, Hamil's attorneys said to Ambry's attorneys in May that "if Mr. Dunlop were the company's controlling stockholder at all relevant times, that fact will color many of the concerns Mr. Hamil raises in his demand."

    Those concerns included whether Dunlop complied with his duties to unaffiliated stockholders in connection with director stock grants and share repurchases. The prior books and records complaint also said bylaw changes allow the board to place transfer restrictions on stockholder’s shares and eliminated the ability of minority shareholders to call a special stockholder’s meeting.

    In a complication, the class filings included a request for appointment of an international process server to deliver notice of the complaint, summons and other court papers to Japan's Central Authority, for delivery to Konica Minolta.

    Konica’s purchase calls for payment of $800 million, in a transaction where Konica would pay 40 percent and Japan’s public-private Innovation Network Corp. investment fund picks up 40 percent. Another $200 million could be paid over the next two years, depending on financial performance.

    The deal was scheduled to close by the end of the year, according to the two companies. Ambry, which has 700 employees and is based in California, is expected to remain in that state.

    The putative class is represented by J. Clayton Athey, Elizabeth M. McGeever and Samuel L. Closic of Prickett Jones & Elliott PA.

    Counsel information was not immediately available for Ambry.

    The case is George Harrison Hamil, et al, v. Ambry Genetics Corp., et al, case number 2017-0587, in the Court of Chancery of the State of Delaware.

    –Additional reporting by Cara Mannion and Kyle McCarty. Editing by Emily Kokoll.

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