Oppenheimer-Pimco Merger Draws Suit

A shareholder of Oppenheimer Capital LP has sued the asset manager and its prospective buyer, Pimco Advisors LP, to block the $1.15-billion stock-swap merger unless the price is raised.

Richard Buzby, who holds an unspecified number of partnership units, accuses Pimco of a “patent conflict of interest” in setting the price and alleges that Oppenheimer and its officers breached fiduciary duties in allowing the transaction to proceed.

Both Pimco, in Newport Beach, and Oppenheimer, in New York, said that the class-action suit is “without merit” and that they will contest it.

The lawsuit, filed in New Castle County Chancery Court in Delaware, seeks to block the deal or obtain an unstated amount of damages. The deal would give Pimco $190 million in assets, making it the nation’s fourth-largest publicly traded money manager.

The suit points out that Pimco completed its acquisition of Oppenheimer’s general partner Nov. 4 for $65 million in stock and $230 million in assumed debts, and installed a Pimco affiliate as the new general partner.

The next day, Oppenheimer’s new general partner agreed to sell the limited partnership to Pimco for $850 million in partnership units. Limited partners have no vote in such a transaction.

But Buzby, through his New York lawyers, Milberg, Weiss, Bershad, Hynes & Lerach LP, asserts that Pimco effectively set the purchase price to benefit itself and its limited partners “to the detriment” of Oppenheimer’s limited partners. He also accused the defendants of unfair dealing.