By MARK MAREMONT
Prominent hedge fund Harbinger Capital Partners paid $60 million to settle a lawsuit alleging that it improperly interfered in a 2006 takeover battle and received nonpublic information about a rival's bid, according to a regulatory filing.
Nacco Industries Inc., the plaintiff, said in the filing that it reached the settlement agreement Monday with Harbinger and others associated with it, two weeks before a scheduled trial. Cleveland-based Nacco's stock rose 8.8% to $119.72 in afternoon trading on the New York Stock Exchange.
A spokesman for Harbinger didn't immediately return a phone call seeking comment.
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New York-based Harbinger, run by Philip Falcone, at one point managed $26 billion, but recently oversaw closer to $9 billion. The firm is known in the hedge-fund industry for its role in pushing for corporate changes at companies where it has held a significant ownership stake, including New York Times Co.
The lawsuit, in Delaware Chancery Court, stemmed from a 2006 battle between Nacco and Harbinger to buy Applica Inc., which marketed appliances licensed under the Black & Decker name. Nacco, which sells appliances under the Hamilton-Beach name, struck a deal to buy Applica, but eventually lost the target to a higher bid by Harbinger.
Nacco alleged that, while it was in confidential talks to buy Applica, the target company's executives were secretly helping Harbinger mount its rival bid. Among the allegations was that Applica executives passed tips on the Nacco negotiations to Harbinger through a consultant working for the hedge fund. The consultant later became a Harbinger employee.
Both the consultant and Harbinger strongly denied receiving any non-public information and denied any improper interference in Nacco's bid.
Harbinger amassed a 40% stake in Applica before Nacco's bid was announced, then used that advantage to win the takeover battle, the lawsuit alleged.
Write to Mark Maremont at mark.maremont@wsj.com
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