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.
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