3 Stockholders Sue to Block Buyout of HCC

A group of public stockholders in HCC Industries last week filed a class-action suit seeking to block a buyout bid worth about $10.5 million by members of the company’s top management, led by chief executive officer Andrew Goldfarb.

The suit, filed in Court of Chancery in Delaware, names HCC, the management group and Chairman Jack Goldfarb as defendants, alleging that they breached their duty to stockholders. The complaint claims that the $8.50-per-share bid for the company is “grossly inadequate” and comes at a time when HCC “is poised to enjoy significantly increased earnings.”

A proxy dated July 25 showed that the Goldfarb group owned about 35% of the stock in HCC, but Goldfarb said that the stock owned by the group plus stock other owners had agreed to sell to them added up to a 48.8% stake.

HCC reported that its earnings rose 170% for the quarter that ended July 1 to $453,000 on sales of $7.1 million. The company posted an annual profit for the year that ended April 1 for the first time since 1986.

Andrew Goldfarb said HCC and the other defendants had not filed a response to the suit. He said he had no comment on the fairness of the offer.

But Goldfarb termed as crazy allegations in the suit that the group offering to buy HCC had “material, non-public information” about the company. He said it is obvious that HCC “is poised for a turnaround.”

In the complaint, the plaintiffs--named as Naomi Blumenthal, John Nitti and Mel Klein--did not say how much stock they own in HCC. Their attorneys could not be reached for comment.