Ronald Perelman canceled the $128-million sale of his stake in movie-camera maker Panavision Inc. to another company he controls, settling investor claims that he arranged the deal to get out of a bad investment.
M&F Worldwide Inc., which is controlled by the billionaire financier, agreed to return the 83% stake in Panavision and debt that Perelman sold it in exchange for $90.1 million in cash and stock he valued at $48 million, M&F officials and shareholders said Monday.
M&F shares rose $1.17, or 28%, to $5.27 in New York Stock Exchange trading Monday. The shares have risen 21% over the last 12 months.
"This was an absolutely ludicrous transaction that had to be stopped," said Mario Cibelli, a money manager for Robotti & Co., which held more than 50,000 M&F shares as of May and was among the investors who sued. "It's been a long, painful road, but the shareholders have finally prevailed."
Perelman decided to pay back the money to licorice supplier M&F, of which he owns 53%, and take back the Panavision shares to end more than two years of litigation over the acquisition, M&F officials said. Other M&F shareholders argued in their suits that the buyout was designed to bail the billionaire out of his Panavision investment.
"This litigation has made it impossible to pursue certain strategic initiatives at Panavision," said Howard Gittis, M&F's chief executive.
Shares of Woodland Hills-based Panavision last traded at $2.74 on Thursday. The New York Stock Exchange said Monday that it is moving to delist the shares.
A one-week trial was held in January in Delaware Chancery Court before a tentative settlement was reached that would have given disgruntled M&F stockholders a $2.15 per-share dividend to drop the suit. Judge Leo Strine Jr. rejected that plan as inadequate and trial resumed July 9.
Investors who alleged the Panavision purchase unfairly diluted M&F's value called the settlement a victory for the company's shareholders. They claimed in the suit that Perelman leaned on M&F's board to buy his stake.
"It tells independent directors that they have to be truly independent and do what's best for all shareholders," said Daniel Breen III, president of Furtherfield Partners, an M&F shareholder who sued over the Panavision deal. Furtherfield Partners is a hedge fund that holds more than 50,000 M&F shares.