NeuroLogica Corp. and its sister firm, medical imaging giant Analogic Corp. (NSDQ:ALOG), buried the hatchet yesterday, settling a lawsuit accusing Analogic of interfering with NeuroLogica’s acquisitions.
The companies are related by dint of being founded by Bernard Gordon, who’s chairman of NeuroLogica and chairman emeritus at Analogic.
"Analogic’s allegations and investigations have been terminated and each party has released the other from all legal claims in accordance with a confidential, mutually-agreeable settlement," according to a prepared statement from NeuroLogica attributed to Gordon.
Analogic spokesman Mark Namaroff told MassDevice that the company is waiting to issue a formal statement until after the case is officially dismissed.
"Our concerns that were previously raised were resolved," Namaroff told us. "The matter has been settled to our satisfaction and we’re going to leave it at that."
In the lawsuit, filed in the U.S. District Court for Massachusetts, NeuroLogica and co-plaintiffs Gordon and two other NeuroLogica executives accused Analogic of seeking to prevent another, un-named company from acquiring NeuroLogica in a bid to force a below-market buyout in its own favor.
The dispute began last summer, when Peabody, Mass.-based NeuroLogica hired an investment bank to broker a sale. Analogic got wind of “the efforts of various competing entities” to buy NeuroLogica, according to court documents, and “announced that it was ‘investigating’ a diverse range of unlawful conduct allegedly committed by NeuroLogica and its senior officers and directors.”
"For several months, NeuroLogica responded to various Analogic inquiries and shared voluntarily with Analogic a constellation of materials (including various Analogic public securities filings and Analogic board meeting minutes and notes) which conclusively dispute Analogic’s allegations," according to the documents. "Undissuaded, Analogic continued its ‘investigation,’ culminating in the recent assertion that Analogic should purchase NeuroLogica at a substantial ‘discount’ due to NeuroLogica’s alleged legal violations. Alternatively, Analogic demanded that NeuroLogica pay millions of dollars to Analogic, and grant to Analogic a substantial part of any consideration paid upon the sale of NeuroLogica."
Calling the lawsuit threat a "pretext," the plaintiffs claimed that the strategy "has successfully frozen NeuroLogica’s effort to sell the company."
"When NeuroLogica disclosed to its intended acquirer Analogic’s threat of high-stakes litigation against the company and its senior executives, the acquirer refused to go forward with the agreed-upon transaction – thus causing enormous financial damage to NeuroLogica and its shareholders."
Analogic said it raised its concerns that "its intellectual property and other rights had been violated" with NeuroLogica before the lawsuit was filed.
"Analogic believes that NeuroLogica has violated Analogic’s rights and that the lawsuit is completely without merit," according to a press release issued at the time.
The lawsuit sought a jury trial, damages, interest, legal fees and triple damages for willful misconduct.