Lawsuit: Valassis Could Have Brought More Money

LIVONIA, MI—A Valassis Communications investor has filed suit against the company's board of directors, claiming it unfairly favored the $1.84 billion takeover bid from a company headed by billionaire Ron Perelman when it could have realized more money, The Detroit News reported.

The investor, a Louisiana pension fund, filed suit Monday claiming that CEO Robert Mason and CFO Robert Recchia met secretly with officials from Perelman's Harland Clarke Holdings prior to Harland's $34.02 per share bid. In the process, the suit maintains, the board of directors abandoned a strategic review of alternatives.

The fund—the Municipal Police Employees Retirement System of Louisiana—believes Valassis' public shareholders are being frozen out in "a grossly unfair transaction," the newspaper said. The fund is asking a judge to block the deal, which is expected to be completed in the first quarter.

The newspaper, quoting the pension fund, said that officials from MacAndrews & Forbes Holdings (Perelman's company) presented an offer to Mason and Recchia last August, but did not share the bid with other Valassis directors for more than a month while the sides negotiated. When the other directors learned of the offer, they shelved a review of strategic alternatives.

The pension fund maintains Mason and Recchia took measures to ensure Perelman's bid was successful, namely providing MacAndrews & Forbes with more information than other bidders received, as well as more time to review Valassis' financial documents.

The fund also contends that a conflict of interest stems from the acceptance of the MacAndrews & Forbes offer, as board members are in line to realize more than $14 million from their options and shares if the transaction is completed, the News reported.