WILMINGTON, Del. (CN) – Landry Restaurants CEO Tilman Fertitta used Hurricane Ike to “steal control” of the company, reducing his $220 million buyout offer from $21 per share to $13.50, then buying shares on the cheap to acquire majority ownership, driving the price of shares owned by minority shareholders to $6, a class action claims in Chancery Court.
Fertitta, who already owned 39% of the company’s shares, offered $21 a share for the other 61% in June 2008, according to the complaint. Hurricane Ike whacked Texas in September, closing 14 Landry’s restaurants in Houston. Fertitta then “recommended that the company reduce the buyout price to $17 [per share] which was, of course, to his enormous personal benefit,” according to the complaint.
“Fertitta’s ploy worked,” the complaint states. The board reduced the price even more, to $13.50 a share, and when “the company’s stock price plummeted on news of the lowered deal terms … Fertitta exploited the lower share price to acquire enough shares in the open market so that by Dec. 2, 2008, he owned over 50% of Landry’s outstanding common stock.”
This sneak attack, carried out with the complicity of the board, “caused the value of Landry’s now-minority shareholders’ investments to fall below $6 per share,” according to the complaint.
Plaintiffs demand damages for Fertitta’s “gross disloyalty and bad faith.”
They are represented by Jahn Kairis with Grant & Eisenhofer.