Newhall Land & Farming Co. said Friday that it agreed to repurchase at least $40 million of its partnership units to help settle a class-action lawsuit that was brought by several dissident Newhall investors.
Newhall is a real estate and agricultural concern that is developing the community of Valencia northwest of Los Angeles. Newhall is organized as a limited partnership whose units, which are similar to shares of stock, are traded on the New York Stock Exchange.
The proposed settlement, which is subject to approval by a Superior Court judge, calls for Newhall to repurchase the units from investors over 18 months. It also calls for the company to pay a special distribution of 30 cents per unit to all unitholders of record Sept. 28, and to make “minor changes” in three of five anti-takeover provisions that Newhall’s unitholders approved last May 16 at management’s urging.
Those provisions triggered the lawsuit by the dissidents, who argued that the new rules would entrench management and prevent investors from receiving a higher price for their units through a merger. The new rules, among other things, raised the level of unitholder approval needed for a hostile takeover of Newhall to proceed.
Newhall President Thomas L. Lee said in a statement that although Newhall still believes the suit is “without merit,” ending the “threat and cost of protracted litigation is in the best interests of the company and its unitholders.”
Newhall’s units closed unchanged Friday at $46.625 a unit. At that price, Newhall’s proposed repurchase plan would buy about 858,000 units, or 4.3% of Newhall’s 19.8 million total units outstanding.