Oracle Corp. was sued by a Michigan retirement fund over its purchase of Pillar Data Systems, a company controlled by Oracle CEO Larry Ellison.
The $116 million Roseville City Employees' Retirement System sued on behalf of Oracle and named among the defendants Mr. Ellison, Oracle President Mark Hurd and Chairman Jeff Henley, according to papers filed Sept. 29 in Delaware Chancery Court in Wilmington. A judge granted the pension fund's request to file its complaint under seal.
Oracle said in June that it would buy Pillar in a deal that required no upfront payments and allowed for an “earn-out” payment that would be made by Nov. 30, 2014, according to a filing with the SEC.
Mr. Ellison owns about 55% of Pillar, according to the SEC filing. Under terms of the deal, the outstanding amount of a $544 million loan Pillar owes to Mr. Ellison will be converted into preferred shares with a right to dividends accruing at an annual rate of 1.5%.
Those shares will be canceled after the transaction closes in exchange for rights to receive a portion of the earn-out, according to the SEC filing.
The pension fund's complaint accuses the Oracle board of breaching its fiduciary duty in connection with the acquisition, according to the court filing.
Deborah Hellinger, a spokeswoman for Oracle, declined to comment on the lawsuit.
