(CN) - A shareholder claims in Delaware Chancery Court that the $2.7 billion buyout of Delphi Financial Group Inc. by Tokio Marine Holdings Inc. will give Delphi's CEO and other officers an unfairly lucrative advantage while shafting shareholders.
     On December 21, Tokio, Japan's largest property and casualty insurer, agreed to purchase the Delaware-based specialty insurance provider for $2.7 billion or $43.875 per share in cash to the company's Class A common stockholders.
     Delphi CEO Robert Rosenkranz will, however, receive $52.875 per share in cash or $55 million for his Class B shares, which amounts to "extortion" of $9 more per share on Rosenkranz's part, says plaintiff Oklahoma Firefighters Pension & Retirement System.
     The merger agreement contains deal protection devices structured to discourage other bidders, and a special committee consisting of Delphi board members failed to "maximize shareholder value" by shopping for alternative offers, the suit says.
     Rosenkranz will also receive $9 for his stock options and restricted stock units while "the merger does not provide for Delphi's Class A stockholders to receive the fair value of their shares based on the proportionate interest in the value of Delphi as a whole, including any control premium," the complaint states.
     Prior to the announcement of the merger, on November 10, while the Tokio transaction was in play, 178,862 deferred Class B shares granted to Rosenkranz in 1998 and 1999 were delivered to the CEO on November 11, further cementing his self-interested dealings with Tokia, plaintiff claims.
     The merger agreement, expected to close in the second quarter of 2012, provides Tokio with "matching rights" if an alternative superior offer is made, a "no-shop" provision enjoining the company from soliciting competing offers, and a $82 million termination fee payable if Delphi accepts a superior offer.
     The plaintiff represented by Michael Hanrahan, Paul A. Fioravanti Jr. and Laina M. Herbert of Prickett Jones & Elliott.