Gotham Sends Up Bat Signal on Safeco/Liberty Deal

Concerns run deeper than the name of the Mariners’ playground.

When the sale of Safeco to Liberty Mutual was announced last April, investors and Wall Street rejoiced. The local insurance giant was going for $68.25 a share—about 50 percent higher than the recent average stock price—which promised to be a financial windfall. The only initial complaints about the transaction came from devout Mariner fans concerned that Safeco Field would soon be known as Liberty Mutual Park (not gonna happen, says M's spokesperson Rebecca Hale). But not every bean counter was happy to see Safeco get gobbled up by the Boston-based company: A mysterious partnership called Gotham Investors is suing both companies and the Safeco Board of Directors—which includes former Governor Gary Locke—claiming the sales pitch to investors was a fraud and stockholders are getting shorted. Gotham Investors' complaint, filed in King County Superior Court on June 2, is largely based on the fact that the sales price is barely higher than when the stock was trading around $67 a share in April 2007. The group argues that even though the stock was trading far lower in the weeks before the sale, it was on its way back up—and Safeco should have fetched a higher price. "We believe the action to be completely without merit and we intend to oppose it," says Safeco spokesperson Jennifer Morgan. Analyst Jim Ryan, who tracks the insurance industry for Chicago-based firm Morningstar, says most astute observers think it's a great deal. Hence, the suit surprised him. "Who's gonna turn down getting $68 for stock that was selling at $45?" he wonders. The "who," however, remains the real mystery of the suit. Ryan's never heard of Gotham Investors, and they aren't listed among Safeco's major shareholders. Clifford Cantor, a Sammamish attorney providing local representation to the plaintiffs, won't say anything except that it's a "general partnership." He refers all additional questions to a New York lawyer, who didn't respond to calls or e-mails. Responses in court by the defendants note that at no point has the plaintiff even identified what state it's based in. The lack of identity behind the elusive Gotham Investors was one argument used by attorneys for Liberty Mutual to get the case kicked into federal court. Cantor says he's trying to get the case pulled back to the county level. But regardless of who they are, Ryan doesn't think the mysterious David has any shot unhinging a Goliath of a deal that most investors have praised.

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