Hedge fund Magnetar Capital is suing U.S. drugs wholesaler McKesson, saying its acquisition of German peer Celesio short-changed minority shareholders and bondholders by around 370 million euros ($507 million).
McKesson structured the transaction in an unlawful way, discriminating against the minority investors, Magnetar said in a statement on Wednesday.
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McKesson's bid for Celesio succeeded following drawn-out negotiations with another Celesio shareholder, activist hedge fund Elliott International, led by U.S. investor Paul Singer.
Elliott, which had invested more than 1.3 billion euros ($1.8 billion) in Celesio shares and bonds that convert into shares, ended up selling all those securities to McKesson.
Magnetar, which holds more than 3 percent in Celesio's shares, accuses McKesson of paying convertible bond holders such as Elliott an equivalent of up to 30.95 euros per underlying share, while owners of Celesio stock were only offered 23.50 euros a share.
Sources familiar with the transaction have said in the past that Elliott, which bought Celesio shares at an average price of 23 euros apiece, made the bulk of its profit from its convertible bond holdings rather than from selling its shares.
"Under the German minimum price protections, McKesson should have offered to pay over 370 million euros ($507 million) of additional consideration to minority shareholders and bondholders of Celesio," Magnetar said.
McKesson bought Celesio as part of its drive to become a global leader in drugs distribution and boost its bargaining power with pharmaceutical firms such as Novartis and Teva.
An initial bid foundered after failing to secure the 75 percent shareholder support it had set as a condition.
The second attempt succeeded and McKesson earlier this month started consultations with Celesio's board on a so-called domination and profit transfer agreement, which will allow the U.S. group to take full control and tap the German company's cash flows.
As part of this deal, McKesson plans to offer investors which did not tender their shares 22.99 euros a share.
Minority investors that stay on board after a takeover bid has succeeded typically reject such offers and seek a mark-up on the offer in court. Some hedge funds specialize in this strategy, dubbed "playing the back end".
Magnetar also said it would file a separate lawsuit in a bid to get the terms of the planned domination agreement revised.
McKesson and Celesio declined to comment.