Toledo's Dana Corp. filed a lawsuit yesterday against ArvinMeritor, Inc., accusing the smaller Michigan rival of illegally using confidential material and asking that its $4.6 billion hostile takeover bid be stopped.
ArvinMeritor misused confidential information Dana gave it two years ago to launch last month's unsolicited $15-a-share tender offer to the Dorr Street company's shareholders, contends the lawsuit filed yesterday in Lucas County Common Pleas Court.
Plus, Dana charges, the suitor violated an agreement with Dana that it would not reveal discussions the two companies had in 2001 to consider forming a joint venture with their replacement-parts operations.
The two auto-parts suppliers had agreed to exchange information two years ago solely to analyze that proposed joint venture, which never was formed, the lawsuit states.
Dana said it gave ArvinMeritor nonpublic information, including detailed breakdowns of Toledo firm's finances and expected future growth, as well as reports about its customer base.
The lawsuit names as defendants ArvinMeritor and its subsidiary formed for the latest takeover, Delta Acquisition Corp.
ArvinMeritor told analysts about the joint venture discussions when it began its takeover attempt last month.
It did so, Dana's suit contends, to signal it “had the inside story on Dana.”
However, the Toledo Fortune 500 corporation said it never would never have provided the information to the Michigan competitor without legal protections it believed ArvinMeritor promised.
ArvinMeritor yesterday did not comment about the lawsuit.
The company has raised the total value of its bid from $4.4 billion, saying there is more Dana debt to assume than originally believed.
A Dana spokesman declined to comment further.
Among other requests in the lawsuit, Dana wants a court order to stop ArvinMeritor from commencing the tender offer it launched July 9 or taking other steps to acquire stock using the confidential information. The offer to shareholders, which Dana board members recommend they reject, expires Aug. 28 but could be extended.
Dana also wants the court to declare that ArvinMeritor violated the Ohio Trade Secrets Act by its use of the confidential information.
“This misuse of information is not only a violation of express contractual provisions and the common law, but also violates all notions of business ethics and fair dealing, “ the lawsuit says.
It is likely other personnel or advisers who were not part of the proposed joint-venture discussions have been made privy to the confidential information, the lawsuit says.