:Chattanooga; :Dec 30, 2009; :Metro/Region; :13

Two lawsuits filed in acquisition of Chattem

By Monica Mercer mmercer@timesfreepress.com

Online: Read one of the complaints. Read previous stories. Comment.

    Two class-action lawsuits filed recently in a local court allege that Chattem Inc. executives undervalued the company in its pending acquisition and acted in “bad faith” by putting their personal interests ahead of those of shareholders.

    Lawyers for Chattem said Tuesday that the lawsuits were “expected” and that such class-action allegations are standard when large public companies change hands.

    “We do not feel that the lawsuits have any merit, and we plan on vigorously defending them,” Chattem attorney Roger Dickson said Tuesday.

    In an indication that at least one more lawsuit is in the works, New York City law firm Levi and Korsinsky is soliciting potential plaintiffs on the Internet for its own class action, stating that an investigation now is under way to find out if Chattem adequately shopped the company to buyers before agreeing to sell it to French company Sanofi-Aventis.

    “Chattem Takeover Unfair?” states the link to the
law firm’s Web site.

    Hugh Sharber, another Chattem lawyer, said Tuesday that the company’s board always has “acted with diligence and in the best interest of shareholders.”

    The two lawsuits filed last week in Hamilton County Chancery Court just days after the acquisition announcement list as plaintiffs individual shareholders of Chattem and a retiree medical benefits trust operated by Pirelli Armstrong Tire Corp.

    Both actions demand unspecified compensatory damages and ask the court to stop the acquisition of Chattem.

    Lawyers in Nashville and San Diego, who represent the plaintiffs in the lawsuits, did not return phone calls Tuesday seeking comment.

    The 130-year-old Chattem announced on Dec. 21 that it had agreed to be bought for $1.9 billion in cash by Sanofi-Aventis, maker of pharmaceuticals such as antihistamine Allegra and heart medicine Plavix.

    Sanofi-Aventis is paying $93.50 per share, 44 percent above the average share closing the last six months.

    Chattem shares soared as a result of the announcement, closing at $93.14 the same day, a 33.1 percent increase in the company’s stock price right before the announcement.

    Chattem is the maker of several well-known brands including Gold Bond and Icy