By Liz Hoffman
A judge dismissed Carl Icahn's malpractice lawsuit against his
longtime foe, law firm Wachtell, Lipton, Rosen & Katz, dealing
the billionaire investor a blow in a bitter dispute over his 2012
takeover of CVR Energy Inc.
The suit alleged that Wachtell, hired to defend the petroleum
refiner from Mr. Icahn's hostile takeover attempt, never told CVR's
directors that its bankers stood to be paid more if the company
were sold instead.
Goldman Sachs Group Inc. and Deutsche Bank AG sought fees from
the company of more than $36 million after the sale to Mr. Icahn's
firm--about twice what they would have been due if the company
remained independent, according to emails and copies of the banks'
engagement letters made public as part of the suit.
In a ruling late Wednesday, a New York state judge said CVR's
board was fully briefed on the fee arrangements and approved them,
undercutting the malpractice claims against its lawyers.
Mr. Icahn couldn't immediately be reached for comment.
In January 2012, Mr. Icahn's firm took a stake in CVR and urged
the company to sell itself. He later made an offer directly to
shareholders, which succeeded despite the board's resistance, and
now owns 82% of the company.
The takeover spawned several lawsuits between the parties. CVR
is currently appealing a judge's order that it pay Goldman and
Deutsche Bank their deal-advisory fees. A federal lawsuit between
Wachtell and CVR remains pending, though Wednesday's ruling could
give the law firm grounds to seek dismissal of that case.
Separately, the Securities and Exchange Commission is
investigating whether CVR properly disclosed the bank-fee
arrangements to its shareholders.
There's no love lost between Wachtell, known for full-throated
defense of corporate boards, and Mr. Icahn, one of Wall Street's
most feared activist investors. The two have faced off in many
proxy fights, including recently at eBay Inc., and Wachtell founder
Martin Lipton has publicly criticized Mr. Icahn as a short-term
profiteer.
Write to Liz Hoffman at liz.hoffman@wsj.com
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