Tags: Ronald Perelman | Michael Milken | Lawsuit | deal

Masters of the Universe Perelman and Milken Get Lawyered Up

By John Morgan   |   Wednesday, 10 Jul 2013 09:11 AM

Is this any way for one world-famous titan of business to treat another? Billionaire deal maker Ronald O. Perelman is suing his old pal and mentor Michael Milken, the former junk bond king and financier, over a deal gone bad.

The New York Times reported one of Perelman’s companies, Harland Clarke Holdings, filed a lawsuit accusing Milken of fraud in the acquisition by Harland of GlobalScholar, an education technology company that Milken backed.

“For Mr. Perelman, people close to him said, the lawsuit is nothing personal against Mr. Milken – just business,” the Time reported.

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However, the lawsuit “surprised Mr. Milken, who had done business with Mr. Perelman for decades and counts him as a friend,” the Times said.

Milken was regarded as a brilliant junk bond impresario during his reign in the 1980s as the head of now-defunct trading firm Drexel Burnham Lambert, but his empire crumbled after he pleaded guilty to securities law violations and went to prison for two years.

During his heyday, Milken and his firm provided financing for several of Perelman’s early deals, including the bold 1985 buyout of the cosmetics giant Revlon that helped put Perelman on the deal-maker map.

After his incarceration, Milken, 67,  resumed a business relationship with Perelman, 70, whose fortune is now estimated at $12 billion.

The lawsuit stems from Harland Clarke’s acquisition in 2011 of GlobalScholar, for which it paid $135 million. The acquisition “soured quickly, according to the complaint, with the business’s performance falling far short of expectations,” the Times said.

According to the complaint, Milken and others made false representations that Houghton Mifflin Harcourt, an educational publisher that Milken also had an investment in, would play a key role in GlobalScholar’s growth, the Times reported.

The lawsuit seeks $135 million in damages, plus punitive damages and other costs.

“This is a baseless action brought by a sophisticated buyer of technology represented by equally sophisticated counsel,” said Milken spokesman Geoffrey Moore. “They negotiated a comprehensive agreement and had abundant opportunity for extensive due diligence before they completed the purchase.”

In other Perelman lawsuit news, the New York Daily News reported that Perelman’s daughter, Samantha, is locked in a legal battle with her uncle James Cohen over a $600 million fortune.

“Samantha claims she was left the bequest by her grandfather Robert Cohen, the founder of Hudson News, and that James wrote her out of Robert’s will three times,” the News reported.

The New York Post reported Perelman is fighting to quash subpoenas for information about his divorce from his late wife and Samantha’s mother, Post gossip columnist Claudia Cohen, in that case.

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.

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