WILSONVILLE, OR -- A Mentor Graphics shareholder has filed a class-action lawsuit against the EDA company over its poison pill defense aimed at preventing a hostile takeover of the firm.
The complaint, made April 4, in an Oregon circuit court, names individually as defendants Mentor's board of directors and the company itself. The plaintiff alleges that the company’s directors breached their fiduciary duties to shareholders in connection with the adoption last June of an poison pill measure and the April issuance of convertible subordinated debentures. The complaint further stipulates the defendants engaged in "self-dealing and obtained a personal benefit by implementing these arrangements."
The complainant, a shareholder named Thomas Charles Longman, seeks an end to the poison pill (called a "shareholder rights plan"), a ban on the debt offering (which has already closed), and for the company to negotiate in good faith with Carl Icahn or "any other bona fide potential bidder" with any offer to purchase the company.
Icahn has been locked in a months-long struggle for control of the printed circuit board and IC software developer. In February, he bid roughly $1.9 billion for Mentor, an offer the company rejected as too low.
Icahn owns 14.7% of the company, just under the 15% threshold that would invoke the poison pill. Longman, however, is not listed as a major direct shareholder.
In reporting the lawsuit via an SEC filing, Mentor called the plaintiff’s allegations "completely without merit" and said it would "contest them vigorously."
Class actions suits against poison pill provisions are not uncommon, and courts generally defer to a board's implementation of anti-takeover measures.