Giant Group Amends Civil Suit Against O.C. Shareholder
Giant Group Ltd., which controls the Rally’s burger chain, said Thursday that it has adopted a “poison pill” takeover defense package and amended a civil lawsuit filed in December against an Orange County businessman who has taken an 8.9% stake in the company.
The shareholder rights plan would be triggered if any shareholder accumulates 15% or more of Giant Group’s common stock. At that point, Giant Group shareholders would be given the right to buy additional shares at a discounted price, a move that would make the company prohibitively expensive.
On Dec. 19, Beverly Hills-based Giant Group filed a civil lawsuit alleging that businessman William P. Foley II is improperly trying to gain control of Giant Group and Rally’s. Foley is chairman of Irvine-based Fidelity National Financial Inc. and Anaheim-based CKE Restaurants Inc., parent company of the Carl’s Jr. chain.
The suit, filed in U.S. District Court in Los Angeles, alleges that Foley and two stockbrokers violated securities laws by failing to properly register their stakes with the Securities and Exchange Commission. The amended complaint alleges that Foley’s group is trying to enlist the aid of an unidentified shareholder in another fast-food chain.
Fidelity National Vice President Andrew F. Puzder said Thursday that Foley’s group recently updated its holdings. Foley’s group has increased its holdings to 8.9% of Giant Group’s stock, up from 8.5%, according to a document filed with the SEC.
Puzder in December denied any wrongdoing and said that Foley intends to be “an active shareholder” in Giant Group, which owns a 47% stake in Rally’s, a Louisville, Ky.-based company with 460 fast-food restaurants in 25 states.
Giant Group alleges that Foley violated SEC rules by “secretly forming a group to buy shares in Giant.” Giant maintains that Foley’s group hasn’t identified all of its members and has understated how many shares it holds. The suit also alleges that Foley has masked its intent to gain control of Rally’s and Giant.
