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Merisel Sues American Capital
The former target is seeking its $3.5 million reverse termination fee after American Capital walked away from the deal citing a MAC
June 24, 2008
While the lawsuit involving Huntsman and Apollo Management have generated much of the headlines in recent days, a smaller dispute is ongoing between Merisel Inc. and American Capital Strategies, with the former filing a $3.5 million lawsuit in the Delaware Court of Chancery seeking to recover a $3.5 million termination fee after a deal between the two fell apart.
American Capital originally agreed to acquire the visual communications company for $5.75 a share back in March of this year. By May, however, the firm had second thoughts, and tried to renegotiate the terms of the deal, citing Merisel’s first quarter performance. In a May 30 letter, American Capital claimed that a MAC clause had been triggered, giving the firm an out, and in a follow up letter, delivered on June 9, claimed that certain representations and warranties made by the company in the merger agreement were untrue. Moreover, American Capital said Merisel had breached its obligations under the merger agreement by not providing information related to its performance.
In a letter to Merisel, American Capital’s counsel stated: “Merisel has materially breached its agreement to provide access to its books and records as it has not provided information relating to its financial performance from and after April 1, 2008, as previously requested.”
Merisel, meanwhile, terminated the merger on June 23, saying in a statement that it believes American Capital “had no basis to terminate the merger agreement and, by doing so, materially breached its obligations thereunder.”
American Capital is received counsel from O’Melveny & Myers LLP on the deal, while Weil, Gotshal & Manges LLP and Rosner & Napieral LLP advised Merisel.
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