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EXHIBIT 27
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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HOWARD LASKER, on behalf of :
himself and all others similarly :
situated, :
: Civil Action No. 14659
Plaintiff, :
:
: CLASS ACTION COMPLAINT
-against- : ----------------------
:
CBI INDUSTRIES, INC. E. HUBERT :
CLARK. JR., JOHN T. HORTON, :
STEPHANIE PACE MARSHALL, GEORGE L. :
SCHUEPPERT, ROBERT T. STEWART, :
ROBERT J. DANIELS, JOHN E. JONES :
EDWARD J. MOONEY, JR., ROBERT G. :
WALLACE, LEWIS E. AKIN, WILEY N. :
CALDWELL, ROBERT J. DAY, GARY E. :
MACDOUGAL, and JOHN F. RIORDAN, :
:
Defendants :
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Plaintiff, by his undersigned attorneys, for his complaint against
defendants (the "Complaint"), alleges the following upon information and belief,
except as to Paragraph 2 hereof, which is alleged upon personal knowledge:
1. This is a shareholder's class action lawsuit on behalf of the public
shareholders of defendant CBI Industries, Inc. ("CBI" or the "Company") These
shareholders are currently being deprived of the opportunity to realize the full
benefits of their investment in CBI. Among other things, the director-
defendants have failed and refused and continue to refuse adequately to consider
a premium offer to acquire control of CBI by Praxair Inc. ("Praxair"). The
director-defendants are
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utilizing their fiduciary positions of control over CBI to thwart Praxair and
others in their legitimate attempts to acquire CBI, and the director-defendants
are trying to entrench themselves in their positions with the Company.
2. Plaintiff, Howard Lasker, is the owner of CBI common stock and has
owned such stock at all relevant times.
3. Defendant CBI is a Delaware corporation with its principal executive
offices located at 800 Jorie Boulevard, Oak Brook, Illinois 60521-2268. CBI is a
holding company comprised of Liquid Carbonic Industries Corporation, the world's
largest supplier of commercial carbon dioxide and a major producer of other gas
products; CBI's Contracting Services, which includes the Chicago Bridge & Iron
Company, a major construction and engineering firm; and CBI Investments, Inc.,
which is the parent company for an operating business in the shipment, storage
and marketing of hydrocarbon products in the Western Hemisphere.
4. The following individual defendants (the "director-defendants")
constitute the entire board of directors of CBI: E. Hubert Clark, Jr., John T.
Horton, Stephanie Pace Marshall, George L. Schueppert, Robert T. Stewart, Robert
J. Daniels, John E. Jones, Edward J. Mooney, Jr., Robert G. Wallace, Lewis E.
Akin, Wiley N. Caldwell, Robert J. Day, Gary E. Macdougal and John F. Riordan
(the "Board"). Director-defendant Jones also serves as the Company's Chairman of
the Board, President and Chief Executive Officer; defendant Akin also serves as
Executive Vice President; defendant Daniels also serves as Executive Vice
President; and defendant Schueppert also serves as
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Executive Vice President and Chief Financial Officer. All director-defendants
receive substantial financial compensation as well as enjoying the perquisites
of office.
5. By virtue of their positions as directors and/or officers of CBI and
their exercise of control over the business and corporate affairs of CBI, the
director-defendants have, and at all relevant times had, the power to control
and influence, and did control and influence and cause CBI to engage in the
practices complained of herein. The director-defendants owed and owe CBI and its
stockholders fiduciary obligations and were and are required to: use their
powers to control and manage CBI in a fair, just and equitable manner; act in
furtherance of the best interests of CBI and its stockholders to maximize
stockholder value; govern CBI in such a manner as to heed the expressed views of
its public shareholders; refrain from abusing their positions of control; and
refrain from advancing their own interests at the expense of CBI and its
stockholders.
6. By virtue of the acts and conduct alleged herein, the
director-defendants, who control the actions of CBI, are breaching their
fiduciary duties to the public shareholders of the Company.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this action for declaratory, injunctive and other
relief on his own behalf and as a class action, pursuant to Rule 23 of the Rules
of the Court of Chancery and on behalf of all common stockholders of CBI (except
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defendants herein and any person, firm, trust, corporation or other entity
related to or affiliated with any of the defendants) and their
successors-in-interest, who are being specially injured and deprived of the
opportunity to maximize the value of their CBI shares by the wrongful acts of
the director-defendants described herein (the "Class").
8. This action is properly maintainable as a class action for the
following reasons:
(a) The class of stockholders for whose benefit this action is
brought is so numerous that joinder of all Class members is impracticable. As of
May 11, 1995, there were in excess of 35 million shares of CBI common stock
outstanding, held by hundreds, or thousands of shareholders scattered throughout
the United States.
(b) There are questions of law and fact which are common to
members of the Class and which predominate over any questions affecting only
individual members. The common questions include, inter alia, the following:
i) whether the director-defendants are unlawfully impeding a
potential acquisition of CBI to the detriment of the shareholders of the
Company, and have breached their fiduciary obligations to plaintiff and other
members of the Class by failing and refusing to attempt in good faith to
maximize value for CBI's public shareholders by adopting strategies, policies,
and plans designed to thwart offers for CBI and entrench defendants in their
positions of control and failing to act with complete candor;
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ii) whether the director-defendants have engaged and are
continuing to engage in an unlawful plan and scheme to perpetuate their control
over and enjoyment of the perquisites of office at the expense of CBI's public
shareholders;
iii) whether the director-defendants have breached the
fiduciary and other common law duties owed by them to plaintiff and the other
members of the Class; and
iv) whether plaintiff and the other members of the Class are
being or will continue to be injured by the wrongful conduct alleged herein and,
if so, what is the proper remedy and/or measure of damages.
(c) The claims of plaintiff are typical of the claims of the
other members of the Class and plaintiff has no interests that are adverse or
antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosecution of this
action and has retained competent counsel experienced in litigation of this
nature. Plaintiff is an adequate representative of the Class and will fairly and
adequately protect the interests of the Class.
(e) The prosecution of separate actions by individual members of
the Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for the party opposing the Class.
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(f) Defendants have acted and are about to act on grounds
generally applicable to the Class, thereby making appropriate final injunctive
or corresponding declaratory relief with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
9. The director-defendants, by virtue of the acts and conduct alleged
herein, are carrying out, in gross disregard of their fiduciary duties to
plaintiff and the other members of the Class, a preconceived plan and scheme to
entrench themselves in office to thwart the offer of Praxair to acquire CBI,
regardless of the benefit to the public shareholders of CBI.
10. On or about October 29, 1995, Praxair announced its bid to acquire
CBI. The Praxair offer will pay $32 per share, or about $1.5 billion, a nearly
60% premium over the October 27, 1995 closing price for CBI, demonstrating
Praxair's good faith. Praxair, which is based in Danbury, Connecticut, is the
leading producer of industrial gases such as oxygen, hydrogen and helium and
last year earned $203 million on sales of $2.7 billion. Praxair is, therefore,
fully capable of financing and consummating the acquisition of CBI.
11. Praxair stated it would pay in stock or cash in a friendly deal,
but if the Board rejects the offer it might buy the shares directly in the open
market.
12. Earlier this year Airgas Inc. attempted to buy CBI's crown-jewel
Liquid Carbonics unit through an unsolicited
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bid for that division. The Board rejected the $680 million bid
and Airgas Inc. withdrew its offer.
13. As reported in The Wall Street Journal on October 30, 1995, Praxair
Chairman H. William Lichtenberger stated in an interview that he attempted
discussions with defendant-director Jones for six months, most recently on
October 20. Lichtenberger said Jones terminated the discussions.
14. As a result, in a letter delivered on Friday, October 27, 1995,
Praxair forwarded to defendant-director Jones a formal written offer stating
that "the best way to proceed is for Praxair to submit a specific proposal to
your Board of Directors for its formal consideration."
15. In response to the announcement of the Praxair offer, the price of
CBI common stock immediately jumped $10.75 per share to $30.875 per share in
intra-day trading.
16. CBI has in place a shareholder rights plan or "poison pill" (the
"Rights Plan"). The Rights Plan is designed to make an unfriendly takeover of
CBI prohibitively expensive and it, therefore, can be used to thwart legitimate
third-party offers for CBI.
17. The director-defendants have taken no action in response to the
Praxair offer and thus far have been content to remain behind the protection of
the preexisting Rights Plan. To act consistent with their fiduciary duties, the
director-defendants should evaluate all available alternatives, including
negotiating with Praxair, which they have failed to do.
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18. The Company's Rights Plan is designed to inflict a substantial
financial penalty on any person who "swallows the pill" and engages in any
transaction without first receiving the approval of CBI's management and
directors.
19. By adopting the Rights Plan, the Company's directors caused a
fundamental shift of power from its shareholders to themselves. The Rights Plan
permits the director-defendants to act as the prime negotiators of -- and, in
effect, totally to preclude -- any and all acquisition offers through their
power to redeem or to refuse to redeem the rights.
20. This fundamental shift of control of the Company's destiny from the
bands of its shareholders to the hands of the director-defendants results in a
heightened fiduciary duty of the director-defendants to consider, in good faith,
a third-party bid, and further requires the director-defendants to pursue a
third-party's interest in acquiring the Company and to negotiate in good faith
with a bidder on behalf of the Company's shareholders.
21. Rather than moving with dispatch to secure a definitive agreement
with Praxair or to negotiate for a superior price or engage in an auction or
market check designed to secure maximum value for the shareholders, defendants
have instead indefinitely delayed making any response and have failed to state
that they will not seek to frustrate or defeat the outside premium bid and have
failed to declare their willingness to deactivate takeover defenses designed
to and which will frustrate
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any acquisition proposal that the Board has neither solicited or approved.
22. The preliminary and permanent injunctive relief requested herein
is therefore necessary to prevent the Company's stockholders from suffering
irreparable injury as a result of the director-defendants' intransigence. There
is no adequate remedy at law for the following injuries with which CBI's
shareholders are currently threatened:
(a) CBI's stockholders may be deprived of any opportunity to
receive the benefits of Praxair's premium offer;
(b) CBI's stockholders may be deprived of the opportunity to
choose for themselves whether to receive the benefits of Praxair's offer or to
remain stockholders of an independent CBI; and
(c) CBI's stockholders will be deprived of the opportunity to
receive the maximum value possible for their CBI stock as a result of the
director-defendants' refusal to negotiate with Praxair or seek alternatives in
order to maximize short-term and long-term value.
23. The director-defendants owe fundamental fiduciary obligations to
the Company's shareholders to take all necessary and appropriate steps to
maximize the value of CBI common stock. In addition, the director-defendants are
obligated to act independently so that the interests of CBI public stockholders
will be protected, to consider seriously all bona fide offers for the Company,
and to conduct fair and active bidding procedures or other mechanisms for
checking the market to assure that the
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highest value available to CBI shareholders is achieved. Further, the directors
of the Company must adequately ensure that no conflict of interest exists
between defendants' own interests and their fiduciary obligations to maximize
stockholder value or, if such conflicts exist, ensure that all such conflicts
are resolved in the best interests of the Company's public stockholders.
24. CBI represents a highly attractive acquisition candidate.
Defendants' conduct has deprived and will continue to deprive the Company's
public shareholders of the very substantial control premium now being offered
and which further exposure of the Company to the market could provide.
25. The director-defendants have refused to take those steps necessary
to ensure that the Company's shareholders will receive maximum value for their
shares of CBI stock. Defendants have refused to consider seriously the Praxair
offer and have failed to announce any active auction or open bidding procedures
best calculated to maximize shareholder value in selling the Company.
26. By virtue of the acts and conduct alleged herein, the
director-defendants, who control the actions of the Company, have carried out a
preconceived plan and scheme to place their own personal interests ahead of the
interests of the shareholders of CBI and thereby entrench themselves in their
offices and positions within the Company. The director-defendants have violated
their fiduciary duties owed to plaintiff and the Class in that they have not and
are not exercising independent business
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judgment and have acted and are acting to the detriment of the Company's public
shareholders for their own personal benefit.
27. As the directors of a corporation faced with a bona fide offer for
the sale of control of the corporation, the director-defendants have a duty to
act on an informed basis to secure the best value reasonably available to CBI's
public stockholders and their conduct in that regard is subject to enhanced
scrutiny.
28. As a result of the acts and conduct described above, the
director-defendants are not fully informing themselves, are not acting in good
faith and have deliberately and/or recklessly breached their fiduciary and other
common law duties which they owe to plaintiff and the other members of the
Class, have engaged in unfair dealing for their own benefit and to the detriment
of the Class, and have pursued a course of conduct designed to prevent an
acquisition of the Company.
29. To the extent that the conduct of the director-defendants is based
upon what they perceive to be a threat that Praxair or any other third party
will acquire control over CBI, the director-defendants have a heightened
fiduciary duty to act in the best interest of the Company's public stockholders
and to act reasonably with regard to any perceived threat. They have recklessly
and in bad faith violated such duties.
30. By reason of the foregoing, the director-defendants have violated
their fiduciary duties to plaintiff and the Class by failing to ensure that the
defensive tactics they
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utilize are reasonable under the circumstances and are not contrary to the
interests of the public shareholders.
31. As a result of the actions of the director-defendants, plaintiff
and other members of the Class have been and will be damaged in that they have
not and will not receive their fair proportion of the value of CBI's assets and
businesses and/or have been and will be prevented from obtaining a fair and
adequate price for their shares of CBI common stock. Defendants are unlawfully
manipulating the corporate machinery of CBI for their own benefit.
32. Plaintiff seeks preliminary and permanent injunctive relief and
declaratory relief preventing defendants from inequitably and unlawfully
depriving plaintiff and the Class of their rights to realize a full and fair
value for their stock at a substantial premium over the market price and to
compel defendants to carry out their fiduciary duties to maximize shareholder
value and not adopt or employ draconian anti-takeover measures.
33. Only through the exercise of this Court's equitable powers can
plaintiff and class members be fully protected from the immediate and
irreparable injury which the defendants' actions threaten to inflict.
34. Unless enjoined by the Court, defendants will continue to breach
the fiduciary duties they owe to plaintiff and the members of the Class, and/or
to aid and abet and participate in such breaches of duty, and will continue to
entrench themselves in office, all to the irreparable harm of plaintiff
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and the other members of the Class, and in defiance of the wishes of CBI
shareholders.
35. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) Declaring this to be a proper class action and certifying
plaintiff as the class representative;
(b) Ordering the director-defendants to carry out their fiduciary
duties to plaintiff and the other members of the Class by announcing their
intention to:
i) cooperate fully with any entity or person, including
Praxair, having a bona fide interest in proposing any transaction which would
maximize shareholder value, including but not limited to, a buy-out or takeover
of the Company;
ii) immediately undertake an appropriate evaluation of CBI's
worth as a merger or acquisition candidate;
iii) take all appropriate steps necessary to enhance the
Company's value and attractiveness as a merger/acquisition candidate;
iv) take all appropriate steps necessary to effectively
expose CBI to the marketplace in an effort to create an active auction for
control of the Company;
v) act independently so that the interests of the Company's
public shareholders will be protected; and
vi) adequately ensure that no conflicts of interest exist
between the director-defendants' own interests and
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their fiduciary obligation to maximize shareholder value or, in the event such
conflicts exist, to ensure that all conflicts of interest are resolved in the
best interests of the public shareholders of CBI;
(c) Declaring that the director-defendants and each of them have
violated their fiduciary duties to the Class;
(d) Enjoining defendants from erecting any unlawful barriers to
the acquisition of the Company by any third party which would make CBI less
attractive as an acquisition candidate;
(e) Enjoining defendants from abusing the corporate machinery of
the Company for the purpose of entrenching themselves in office;
(f) Ordering the director-defendants to take steps to facilitate a
premium acquisition by utilizing the Rights Plan exclusively in a manner
designed to maximize shareholder value;
(g) Ordering the director-defendants, jointly and severally, to
account to plaintiff and the Class for all damages suffered and to be suffered
by them as a result of the acts and transactions alleged herein;
(h) Alternatively, awarding plaintiff and the Class compensatory
damages;
(i) Awarding plaintiff the costs and disbursements of this action,
including a reasonable allowance for plaintiff's attorneys' and experts' fees;
and
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(j) Granting such other and further relief as may be just and
proper.
Dated: October 30, 1995
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Joseph A. Rosenthal
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Joseph A. Rosenthal
First Federal Plaza
Suite 214
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
David J. Bershad
Steven G. Schulman
Lori G. Feldman
MILBERG WEISS BERSHAD HYNES
& LERACH
One Pennsylvania Plaza
New York, New York 10119
(212) 594-5300
STULL STULL & BRODY
Jules Brody
6 East 45th Street
New York, New York 10017
(212) 687-7230
WEISS & YOURMAN
Joseph Weiss
319 Fifth Avenue
New York, New York 10016
(212) 532-4171
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