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ZUG, SwitzerlandThe takeover battle between SCOR S.A. and Converium Holding Ltd. took another twist last week when Converium announced it had filed a lawsuit against SCOR and a major shareholder in the United States.
Zug, Switzerland-based Converium said it had filed a complaint in the U.S. District Court for the Southern District of New York against Paris-based SCOR and Wilen, Switzerland-based Patinex A.G., alleging violations of U.S. securities law.
According to Converium, SCOR and Patinex violated sections of the Securities Exchange Act of 1934.
The reinsurer claims that SCOR "unlawfully and unfairly excluded Converium's U.S. shareholders, a group which we believe represents approximately 22% of Converium's outstanding shares, from participating in SCOR's unsolicited tender offer."
A spokesman for Converium said the company also contends that SCOR and Patinex failed to make proper disclosures in connection to their purchase and ownership of Converium shares.
SCOR, which has a 32.9% stake in Converium, said it had "complied with all applicable legal and regulatory provisions in connection with its tender offer on Converium and intends to defend itself vigorously against the unfounded allegations of Converium's top management."
Converium said it sought an expedited discovery and briefing schedule to allow a hearing on a motion for a preliminary injunction before May 22--the last date on which Converium shareholders may tender shares in connection with SCOR's offer.
The announcement came after Converium's board urged shareholders to reject SCOR's offer, which values the company at about $2.56 billion.
And after announcing increased income for the first quarter of 2007--$150.9 million from $49.9 million in the first quarter of 2006--Converium reiterated its belief that the company would be stronger as an independent entity than as part of SCOR.
In a statement, Inga Beale, chief executive officer of Converium, said the company believed SCOR's offer undervalued it and its medium-term prospects.
"We are convinced that Converium's standalone prospects are more promising than with SCOR," she said. "In the interest of our shareholders we will continue to oppose SCOR's unfriendly approach should it remain unchanged," she added.
For its part, SCOR said it regretted the stance taken by Converium's board, and said it would continue to pursue its bid.