Pension plan sues to stop Lilly buyout of ImClone

NEW YORK (Reuters) - A pension plan has filed a legal challenge in an effort to stop Eli Lilly and Co's (LLY.N) proposed $6.5 billion buyout of ImClone Systems Inc IMCL.O, contending the pact is unfair to ImClone stockholders.

The deal "is the result of a hopelessly flawed process," the State-Boston Retirement System of Massachusetts contends in the lawsuit.

The pension plan, and several other individual shareholders of ImClone, are seeking to halt the merger from proceeding until more information is presented to stockholders.

They accused ImClone's board of directors, including billionaire investor Carl Icahn, who is chairman of the biotechnology company's board, of breaching their fiduciary duties in agreeing to the October 6 deal. Eli Lilly was also named as a defendant.

The lawsuit, filed October 22 in New York State Supreme Court, accuses ImClone of blocking alternative offers to buy the company and failing to provide shareholders with material information on the proposed merger. It seeks class-action status on behalf of other ImClone stockholders.

Lilly outbid Bristol-Myers Squibb Co (BMY.N) in the takeover battle for ImClone, maker of cancer drug Erbitux and several experimental medicines.

ImClone and Lilly both disclosed the lawsuit in regulatory filings and said a court hearing on the matter was scheduled for Thursday.

They said they believed the complaint was without merit and that they planned to vigorously defend themselves against the lawsuit.

(Reporting by Martha Graybow, editing by Maureen Bavdek)