Cargotec will no longer have to pay damages resulting from a dispute over a failed acquisition in the offshore industry in 2011.
Cargotec has announced that its has won an appeal against a ruling requiring it to pay almost US$13M in damages to Logan Industries in the Texas.
In 2010 Cargotec was in the process of due diligence to acquire Logan Industries, a company specialising in heavy equipment servicing and repair for the offshore industry in the Gulf of Mexico. Cargotec wanted Logan Industries to expand its ability to service and repair MacGregor’s subsea cranes and other equipment in the Americas.
The companies had signed a Letter of Intent (LoI) and a confidentiality agreement that prohibited Cargotec using confidential information obtained in the due diligence process for commercial advantage. The deal fell through, and in April 2012 Cargotec set up its own offshore service centre in Houston, which it subsequently closed.
Though Logan Industries found another buyer (the Dutch company DGI), the price was lower than what it expected to achieve from selling to Cargotec. Logan’s original shareholders subsequently sued Cargotec in 2016 for breach of contract and fraud, alleging that Cargotec violated the confidentiality provision of the LoI and improperly used Logan’s confidential information to open and operate a competing business.
A jury found that Cargotec was guilty, and awarded Logan US$10M for loss of value, $2.7M for lost net profits, plus costs. Cargotec appealed on several legal points, but most of these did not need to be addressed as the appeal judge found that there was insufficient evidence to show any loss of net profits or business value after the deal fell through. The original decision was reversed and a "take-nothing" judgement was awarded for Cargotec.