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AMRI sued over alleged stockholder deception

AMRI sued over alleged stockholder deception

Officials accused of arranging big payoff for selves in sale of company
AMRI sued over alleged stockholder deception
Photographer: Shutterstock

ALBANY -- Albany Molecular Research Inc. is facing a potential class-action lawsuit by former owners of its stock, based on allegations by one shareholder that AMRI directors served their own interests during negotiations to sell the company to two private equity firms.

The case was filed Monday in federal court in Albany on behalf of Robert Rodak, a Kansas man who owned 500 shares of AMRI stock. Named as plaintiffs are Thomas E. D’Ambra, co-founder and longtime CEO of AMRI; several other company officials; AMRI itself; and Carlyle Group and GTCR, which acquired the Albany-based drug researcher/manufacturer this summer.

Rodak seeks class action status on behalf of other stockholders who he says were similarly damaged; a jury trial; award of compensatory damages; interest, fees and other costs; and any other damages the court deems appropriate.

The litigation stems from the company’s sale this summer for $21.75 per share. The price was 61 percent higher than its closing value on April 5 and 42 percent higher than the 60-day weighted average leading up to April 5 -- the last trading date before published accounts surfaced that AMRI was in talks to be acquired.

AMRI stock had ranged from $12.51 to $22.17 per share in the preceding 12 months.

Stockholders voted 35.3 million to 115,995 in favor of the deal. 

Rodak alleges that company leadership rushed the sale through with deceptive statements to stockholders in hopes of personal profit for themselves.

“The merger is a self-interested transaction in which AMRI’s chief executive officer, William S. Marth, and its board decided to sell the company in order to receive lucrative personal payoffs rather than allow AMRI’s public stockholders to share in the company’s bright future,” the lawsuit reads.

It alleges that before company officials decided to pursue the sale, they told stockholders they anticipated annual revenue exceeding $1 billion, but after the decision to sell, they lowered their revenue projections, so as to persuade stockholders that selling the company was the best option.

“Even after making that self-interested decision, the Individual defendants were apparently so eager for their payday that they prematurely ended the sales process,” the lawsuit charges, explaining that AMRI officials did not compel GTCR and Carlyle to compete against each other, and did not consider a $22.50-per-share offer from another bidder.

The lawsuit details how the company officials allegedly benefited:

  • “AMRI’s officers and directors received a total of over $27.5 million in special benefits -- not available to ordinary stockholders -- for outstanding incentive awards, each of which became fully vested and was cashed out in connection with the merger, but would not have been absent a sale.”
  • “AMRI’s management stood to receive millions more in golden parachute benefits that would not be available absent a sale.”
  • “The officers and directors stood to receive over $132 million from the sale of their otherwise-illiquid company shares.”
  • After the merger, “AMRI’s management got the best of both worlds: They received substantial merger-related payoffs and were allowed to remain in their positions without being subject to the hassles and filing requirements of running a publicly traded company.”

AMRI is a global pharmaceutical research, development and manufacturing company. It is headquartered in Albany and has its largest facility in East Greenbush. It had 26 other facilities and 3,085 employees worldwide as of Dec. 31, 2016. A little less than half of its workforce — 1,392 people — was in the United States. It has 315 employees in Albany and 365 in East Greenbush.

The Carlyle Group is a global alternative asset manager with $170 billion of assets under management across 299 investment vehicles as of June 30. It employs more than 1,550 people in 31 offices across six continents. 

GTCR is a private equity firm focused on investing in growth companies in the financial services and technology, healthcare, media/telecommunications and growth business services industries. It has invested more than $12 billion in more than 200 companies. 

An AMRI spokeswoman in June said the deal was expected to result in no local cutbacks, as the new owners would be focused on growth rather than restructuring the company or selling off parts of it.

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