A Kennecott Copper Corp. shareholder's family has filed suit against the company in an attempt to block Kennecott's $567 million acquisition of Carborundum Co.'s stock for $66 a share.
Trustees and custodians for two minors in the family of Frederick S. Danziger, a New York investor, have filed suit in New York State Court to halt the purchase alleging that it "constitutes an unlawful waste of Kennecott's assets." The court papers charge that Kennecott's directors have "imprudently and recklessly committed Kennecott to a bidding contest for Carborundum at prices far in excess of the value of Carborundum."
The Danziger holdings in Kennecott are valued in excess of $50,000.
Earlier this month, Eaton Corp. initially offered $47 a share for Carborundum when the company's stock was trading at $33.25 on the New York Stock Exchange. Carborundum's stock quickly jumped to prices over $47 and stayed here. Carborundum said it would fight the Eaton takeover. The Continental Group, meanwhile, reportedly offered more than $60 a share for the stock in quiet negotiations.
Then Kennecott's board offered $19 a share more than Eaton, an offer which was readily accept by Carborundum's board.
David Gorman, Kennecott's counsel, said yesterday "We'll be in court Monday to vigorously oppose the action of this group that doesn't have all of the information to make a proper judgment.
Gorman said Kennecott has been in a "frustating" position because it cannot legally disclose certain facts about the Carborundum transaction before Tuesday.
"It's too bad," he said that the hearing is just a day before the formal release of the information about the offer. "Perhaps some of the information will have to come out during the Monday hearing."