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Shareholders File Class Action Suit Against Warner Music Group

Plaintiffs claim they were stiffed when CEO rejected higher offer in selling the company

May 25, 2011 11:35 AM ET
Shareholders File Class Action Suit Against Warner Music Group

A Warner Music Group shareholder has filed a class-action lawsuit against the company, claiming that its chairman and CEO Edgar Bronfman Jr. and its board of directors breached their fiduciary duty by accepting a $3.3 billion bid from Len Blavatnik's Access Industries rather than a higher offer from billionaire brothers Tom and Alec Gores. The suit seeks to block the consummation of the deal with Access and provide damages to the defendants.

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The complaint, filed by stockholder Derek Cournoyer, makes a point of noting that Blavatnik was a former member of the WMG board and is a personal friend of Bronfman, insinuating that this was a major factor in the decision to go with Access over the Gores Group.

Cournoyer's class action suit is preceded by a similar action filed against WMG by another shareholder plaintiff in Delaware.

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