NACCO resolves claims against Harbinger hedge funds

Client(s) NACCO Industries, Inc.

In 2006, Applica Incorporated terminated its merger agreement with Jones Day client NACCO Industries, Inc. in favor of a competing offer from the Harbinger hedge funds. During the NACCO-Applica negotiations, Harbinger had accumulated Applica stock, while disclosing in Schedule 13D filings that its shares were purchased for "investment purposes". Represented by Jones Day, NACCO initiated litigation in Delaware Chancery Court challenging the termination due to breaches of the agreement's "no shop" and "prompt notice" deal protection clauses and alleging that Harbinger's Schedule 13 filings had been fraudulent. In a December 2009 landmark decision, Vice Chancellor Laster ruled that benefit-of-the bargain damages were available for the alleged deal protection breaches and that NACCO could pursue its Schedule 13 claims as a matter of Delaware common law fraud. Shortly before trial was to commence in February 2011, Harbinger and Applica settled the litigation.

NACCO Industries, Inc., et uno v. Applica Incorporated, et al., C.A. No. 2541-VCL (Del. Ch.)