Private equity firm TPG has asked a specialised Dutch court to order an inquiry into the affairs of Strauss Coffee, in which it holds a 25 percent stake, claiming majority owner Strauss Group had abused its rights in the company.
The move comes after TPG had been looking to sell the stake, for which it paid $293 million in 2008.
TPG has the right to trigger an initial public share offering in Strauss Coffee and last week Israeli financial newspaper TheMarker reported the company was being lined up for a listing on the New York Stock Exchange.
However, that IPO process has now been disrupted by a dispute between the two investors, brought to a head by what TPG said was Strauss Group's proposed dismissal of Strauss Coffee Chief Executive Todd Morgan.
In its filing with the Dutch Enterprise Chamber, which hears corporate governance disputes, TPG is seeking an injunction against Morgan's dismissal and the appointment of an independent director to Strauss Coffee's board, TPG said on Tuesday.
Strauss Coffee is a Dutch-registered company.
Israel-based Strauss Group said it had not yet received the claim. "Once it is received, the company will study the claim and vigorously defend against it," Strauss said in an emailed statement.
"Strauss Group is committed to support Strauss Coffee and to achieving the best outcome for all stakeholders of the company," it said. It made no further comment and did not refer to Morgan.
TPG said its claim was based on what it called the abuse by Strauss Group of its majority shareholder rights, saying the group had overcharged Strauss Coffee for "non-existent and/or insufficient services" by many millions of euros.
Sources familiar with the matter said TPG believed Strauss Group was overcharging by 6 million euros a year in areas such marketing, human resources, legal and information technology.
TPG also cited the proposed dismissal of Morgan, despite his being credited with leading an increase in the turnover and profitability of the company. Morgan was TPG's board representative to Strauss Coffee before he became CEO three and a half years ago.
"Strauss Group is seeking to dismiss Mr. Morgan after he had mentioned the issues of overcharging ... to Strauss Coffee's board of directors and sought independent advice," TPG said. The sources said Morgan had hired a Dutch law firm to look into the matter.
In July, Strauss said it and TPG were examining options for the sale of TPG's stake in Strauss Coffee after TPG held the stake for five years.
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