B. Manischewitz Co., a New Jersey maker of matzo and other kosher food products, said Tuesday that it has agreed to pay $1.5 million to settle claims by a Beverly Hills investment firm relating to an aborted, $44.6-million buyout effort.
Manischewitz also officially took itself off the sale block, saying it had informed Shearson Lehman Hutton, its investment bank, that it was "no longer interested in acquisition proposals."
Under terms of the settlement, Levine, Tessler, Leichtman & Co., a Beverly Hills firm that tried for months to buy Manischewitz, apparently compromised in accepting the $1.5 million. It had argued that it was entitled to a $2.4-million "cancellation fee," while Manischewitz contended that it didn't owe the firm anything.
After friendly negotiations during which it seemed that a deal was all but certain, Manischewitz and Levine Tessler suddenly soured on each other late last month. That was after Levine Tessler sweetened its bid to $841 a share to top that of rival kosher foods maker National Foods.
Grand Jury Looking Into Alleged Violations
Manischewitz, based in Jersey City, accused the Beverly Hills firm of dragging its feet. Levine Tessler, for its part, countered that Manischewitz was unwilling to disclose information about the possible effects of a long-running grand jury investigation into alleged antitrust violations in the kosher food business.
In an Aug. 4 letter mailed to shareholders, Manischewitz said it informed Levine Tessler in mid-July that the investigation "had intensified (and) now probably encompassed most, if not all, of the company's products." Several company officials have testified before a New Jersey grand jury looking into the matter.
On July 31, Levine Tessler said it would not proceed with its acquisition. Since then, the two companies have been scrambling to reach a settlement to avoid going to court.
Manischewitz also said it settled two shareholder suits related to the failed merger effort. The company said the shareholders agreed to drop those suits in exchange for Manischewitz's agreement not to oppose a court award of up to $375,000 for the plaintiffs' legal fees.
All terms of the settlement are subject to approval by the Court of Common Pleas of Cuyahoga County, Ohio.