Abraxis Board Settles Shareholders Suit

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Abraxis BioScience Inc. directors have agreed to pay $14.3 million to settle claims they breached their fiduciary duties to shareholders when the company’s predecessor merged with American BioScience Inc. in 2006, according to a report.

Several shareholders in December 2005 sued the predecessor, Illinois-based American Pharmaceutical Partners Inc., claiming that directors, including Los Angeles-based Abraxis Chief Executive Patrick Soon-Shiong, failed to protect shareholder interests by agreeing to a deal the shareholders considered unfair.

The directors have denied any wrongdoing, according to a Bloomberg News account from court papers filed in Delaware Chancery Court on Tuesday announcing the settlement.

Privately held American BioScience, which was owned by Soon-Shiong, controlled 66 percent of American Pharmaceutical at the time the merger was announced in November 2005. At the time, he also was CEO of American Pharmaceutical. Shareholders accused directors of giving Soon-Shiong “carte blanche” to structure the deal without a vote from minority investors, according to court papers. Abraxis was the result of that merger.

Abraxis, which makes the breast-cancer drug Abraxane, spun off its generic injectable-drug business last November into a company called APP Pharmaceuticals Inc. Fresenius SE closed the acquisition of APP for $4.6 billion on Sept. 11.

An Abraxis spokesman told the Business Journal that the settlement would be paid from the board’s insurance and American BioScience funds.

Los Angeles-based Abraxis on Wednesday closed down $1.65, or 2 percent, to $72 in trading on the Nasdaq.

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