Icahn, hedge funds sued over Endeavor appraisal tactics

Silver Lake and Endeavor filed suit Monday in the Delaware Court of Chancery against Carl Icahn’s investment firm and several hedge funds, alleging coordinated appraisal and merger-arbitrage actions connected to Silver Lake’s $25 billion acquisition of Endeavor.

The complaint asks the court to bar Icahn’s firm from pursuing an appraisal claim and identifies Pentwater Capital Management and Troluce Capital Advisors as participants in the campaign. Silver Lake paid $27.50 a share for Endeavor; dozens of investment firms subsequently sought appraisal proceedings in Delaware, arguing the company was worth more than the deal price.

Silver Lake and Endeavor allege the investors coordinated trading and litigation strategies to convert the appraisal process into a tradable litigation opportunity. The filing seeks to prevent firms from bringing appraisal claims based on shares acquired after the buyout announcement and alleges violations of securities and antitrust laws tied to the alleged coordination.

The complaint quotes the alleged agreement among investors as working “for the common purpose of pursuing a broad litigation offensive attacking the merger.” Their lawyers urged the court to preserve Delaware’s appraisal mechanism as a remedy for shareholders who could not prevent a transaction and wanted judicial review of price.

Troluce CEO Jared Dubin, in a statement, wrote the firm was reviewing the allegations and intends to continue pressing its rights in Delaware because it believes the merger consideration undervalued Endeavor. Representatives for Icahn Enterprises and Pentwater did not immediately respond to requests for comment.

Separately, Icahn Enterprises and a Swedish bank filed a proposed class action accusing Endeavor executives of breaching fiduciary duties by backing a deal they say disadvantaged minority shareholders.

The Court of Chancery will consider whether to block the challenged appraisal claims and to address the broader allegations as the case proceeds.