Malibu toy maker Jakks Pacific Inc. agreed to pay $725,000 to resolve an investor lawsuit questioning the fairness of its $54.5-million acquisition of Toymax International Inc.
Jakks, which makes World Wrestling Entertainment action figures, said last year that it would pay $3 in cash and $1.50 in stock for each share of Toymax, a 48% premium at the time. Toymax shareholder Harry Young Jr. sued in Delaware Chancery Court saying the stock was worth more.
After negotiations among lawyers, Jakks said it would distribute $725,000 to former Toymax shareholders. Investors' lawyers would get as much as 30% of that sum in legal fees, subject to a judge's approval at a later hearing.
The action was dropped, in part, because the settlement was "in the best interests" of shareholders, Young's lawyers said in court papers. Jakks said the buyout, which was completed in October after acquisitions of Britain-based Kid Biz Ltd. and Pentech International Inc., would make Jakks the third-largest U.S. toy maker.