Bandag Faces Lawsuit over Bridgestone Purchase

A number of Bandag Inc. shareholders have reportedly filed a lawsuit against the retreading supplier for allegedly failing to seek offers of purchase from potential buyers other than Japanese tyre giant Bridgestone. The lawsuit was filed in the District Court in Bandag’s hometown of Muscatine County, Iowa on December 8 by the Plumbers and Pipefitters Local 572. They are seeking class action status on behalf of all shareholders.

Bandag’s preliminary statement released to shareholders claims the lawsuit contains allegations that the company’s directors “breached their fiduciary duties of due care and good faith by failing to solicit bids from other potential bidders and failing to maximise shareholder value and by creating deterrents to third-party offers.”

The suit names Bandag’s chairman, CEO and president Martin Carver and directors Gary Dewel, Stephen Newman, Roy Carver Jr., James Everline, Phillip Hanrahan and Amy Hutton as defendants. The plaintiffs are reportedly seeking a court injunction preventing the consummation of Bridgestone’s acquisition of Bandag and instruct the defendants to “take appropriate steps to maximise shareholder value.”

Bandag do not intend to take this court action lying down. A company spokesman has stated “while the lawsuit is in its preliminary stage, we believe that the claims in the lawsuit are without merit and intend to vigorously defend it.”

Bridgestone’s acquisition of Bandag is scheduled to close either late in the first quarter or early in the second quarter of this year. According to Bandag, the company’s shareholders have not as yet voted on the proposed deal.