Paris Hilton Perfume Maker Sued by Investor in Delaware Over Proposed Sale
A shareholder of Parlux Fragrances Inc. (PARL) sued the companys board of directors, claiming they are selling the maker of Paris Hiltons perfume too cheaply.
Jose Dias sued Parluxs chairman, the companys directors and the proposed buyer, Perfumania Holdings Inc. (PERF), which operates a chain of perfume shops, in a case made public today in Delaware Chancery Court in Wilmington. Perfumania, controlled by the family of Chairman Glenn Nussdorf, is one of Parluxs biggest customers, according to the complaint.
Perfumania was able to use the companys dependence on them to negotiate a deal that allowed it to pick up the company at an unfair price and under unfair terms, Dias claimed in the complaint.
Parlux said the proposed cash and stock deal was worth $170 million when it was announced in December. Since then, Perfumanias shares have plunged, reducing what Parluxs investors will receive, according to the complaint.
The deal would give Perfumania control over its largest trading partner and the maker of celebrity-branded fragrances from Rihanna, Paris Hilton and Nicole Miller.
Under the sale, holders of Fort Lauderdale, Florida-based Parlux can choose to take $4 in cash and 0.20 share of Perfumania or 0.53333 of a share of the acquirer.
The board hasnt released enough information about the proposal and failed to pursue a deal that is in the best interests of shareholders, Dias claimed in the suit.
The complaint asked the judge to halt the proposed sale and to c! ertify t he case as a class-action, or group, lawsuit to represent all shareholders.
Perfumania Chief Executive Officer Michael Katz and Palux CEO Frederick Purches didnt immediately return calls seeking comment on the suit.
The case is Jose Dias v. Frederick E. Purches, CA 7199, Delaware Chancery Court (Wilmington).
To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net