WILMINGTON, Del. May 20 Rock-Tenn Co RKT.N
cleared a legal hurdle in its drive to acquire larger paper and
packaging rival Smurfit-Stone Container Corp SSCC.N for $3.5
billion after a judge refused on Friday to block the deal.
Shareholders sued arguing Smurfit-Stone's board improperly
agreed to sell the company for less than it's worth.
They said conflicts of interest tainted the deal.
Smurfit-Stone's board relied on the advice of the bank Lazard,
which stood to make $23 million if the deal closed but only $3
million if it didn't, according to documents filed in
Delaware's Chancery Court.
The board's "decision to retain and rely upon the work of
Lazard was not unreasonable and, as such, is not likely to
provide a predicate for a violation of its members' fiduciary
duties," Vice Chancellor Donald F. Parsons said in his ruling.
In addition, Smurfit-Stone's chief, Patrick Moore, general
counsel Craig Hunt and former president Steven Klinger stood to
collect $38 million if the company reached a change of control
agreement by April.
Shareholders of the two companies will vote on the deal on
Investment funds that own 9 percent of Smurfit-Stone's
common stock have said they oppose the deal and plan to vote
The case is In re Smurfit-Stone Container Corp Shareholder
Litigation, Delaware Chancery Court, No. 6164.
(Reporting by Tom Hals in Wilmington and Ernest Scheyder in
New York; Editing by Gary Hill)