Medeva faces US investors' lawsuit
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Your support makes all the difference.MEDEVA, the troubled drugs group, is facing legal action from disgruntled US shareholders over its dramatic profit warning last month.
The warning, that unforeseen problems with stock levels at its IMS American subsidiary meant this year's earnings would be up to pounds 10m lower than expected, caused the share price to collapse from 216p to 110p.
The revelation that it was facing a lawsuit initially sent Medeva's share price down a further 15.5p yesterday, though it later rallied to close down 11.5p at 95.5p.
The company said a 'class action' for unspecified damages had been filed against it and eight of its executives in a Los Angeles court by Philip Kozlowski, a holder of Medeva's American depositary receipts.
Class actions are common in the US and mean that the plaintiff sues on behalf of all as-yet-unidentified individuals who are affected by the same circumstances, as well as for himself.
The action alleges that the company made false and misleading statements regarding its business prospects in breach of US federal securities laws. But Medeva said the lawsuit was 'totally without merit' and it intended to oppose all claims vigorously.
It added that it had been told by its professional advisers that such lawsuits were not uncommon in the US when a company's share price fell sharply following unexpected unfavourable news.
It had been advised that 'the mere commencement of one or more such lawsuits is no indication they have merit'.
A spokesperson for Medeva said the suit had been filed late on Wednesday. The eight directors named in the lawsuit comprised all the board with the exception of Dr William Bogie, who is responsible for European operations, and Michael Julien, a non-executive director, she said.
They also included one non-director, Christine Foden, the company's chief financial officer.
In broad terms, the allegations refered to such things as 'making optimistic statements about the company's prospects and failing to disclose problems', she added. 'Obviously that is something we would deny.'
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