Delphi Financial Group, Inc. Investor Files Lawsuit Against Directors Over Takeover

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Company Name(s): 
Delphi Financial Group
Case Name: 
Delphi Financial Group Deal Case 12/30/2011
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Proposed
Affected Securities
NYSE: DFG
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
12/30/2011
Class Period Begin: 
07/20/2011
Class Period End: 
05/15/2012
Court of Filing: 
Court of Chancery of the State of Delaware
Date Settled: 
07/31/2012
Settlement Amount: 
$49,000,000
Deadline to Participate in Settlement: 
08/15/2012
Settlement Notice: 
application/pdf iconDelphi_Financial_Group_Notice_2012.pdf
Settlement Proof: 
application/pdf iconDelphi_Financial_Group_Proof_2012.pdf
Summary: 

May 23, 2012 (Update) -- $49 million proposed consolidated settlement.

According to the Notice: Plaintiffs and Court-appointed class representatives Pontiac General Employees Retirement System, KBC Asset Management N.V., Cleveland Bakers and Teamsters Health & Welfare Fund, and Oklahoma Firefighters Pension and Retirement System (collectively, “Plaintiffs” or “Class Representatives”), on behalf of themselves and the Settlement Class (as defined in Paragraph 35 below), have reached a proposed settlement of the Action for $49 million in cash (the “Settlement”). If approved by the Court of Chancery of the State of Delaware (the “Court”), the Settlement will resolve all claims in the Action.

March 2012 (Update) -- Investors' claims are insufficient to block a shareholder vote on the takeover. Investors claimed that CEO Robert Rosekranz was extorting a premium for his shares of the company.

San Diego, Dec. 30, 2011 (Shareholders Foundation) -- An investor in NYSE:DFG shares filed a lawsuit against directors of Delphi Financial Group in effort to stop the proposed takeover of Delphi Financial Group, Inc by Tokio Marine Holdings, Inc. for $43.875 per Class A share and $52.875 per Class B share in cash.

According to the complaint the plaintiff alleges that the defendants breached their fiduciary duties arising out of the attempt to sell Delphi Financial Group at an unfair price via an unfair process.

On December 21, 2011, Delphi Financial Group, Inc. (NYSE:DFG) and Tokio Marine Holdings, Inc. announced that they have entered into an agreement under which Tokio Marine Holdings, Inc.will acquire all outstanding shares of Delphi Financial Group, Inc, for $43.875 per Class A share and $52.875 per Class B share in cash, through Tokio Marine Holdings' wholly owned subsidiary, Tokio Marine & Nichido Fire Insurance Co., Ltd.. In addition, Delphi Financial Group shareholders will receive $1.00 in cash per share pursuant to a one-time special dividend from Delphi Financial Group for each share of Class A and Class B stock they own.

Following the takeover news shares of Delphi Financial Group, Inc. jumped from $25.43 per share on Dec. 20th to $42.92 on Dec.21, 2011.

However, Founder Robert Rosenkranz, who represents 49.9% of Delphi’s votes, has already agreed to vote in favor of the transaction and the plaintiff claims the offer undervalues Delphi Financial Group, Inc. Indeed, Delphi Financial Group’s performance increased for its investors in the past. Delphi Financial Group’s annual Revenue rose from $4.143billion in 2008 to $1.73billion in 2010 and its Net Income increased from $36.68million for ’08 to $173.15million for 2010.