Midas’ European Licensee Files Suit in Italy Claiming Breach of Contract
January 06 2012 - 9:00AM
Business Wire
Midas, Inc. (NYSE: MDS) received notice on Jan. 3, 2012, that
its European licensee, MESA S.p.A., has filed suit in the Court of
Appeal in Milan, Italy, claiming that Midas is in breach of the
1998 license agreement and agreement for strategic alliance (ASA)
under which MESA operates the Midas automotive service business in
Europe. The complaint alleges that Midas is in breach of these
agreements due to, among other things, Midas’ alleged failure to
cooperate with MESA to improve the Midas System.
MESA seeks damages for the alleged breach of up to €5,782,000,
representing a portion of the royalties MESA paid to Midas for the
period from June 2009 through October 2011. MESA also seeks a
declaratory judgment suspending MESA’s obligation to pay 80 percent
of its future royalty payments owed to Midas under the license
agreement.
Midas believes MESA’s claims are without merit and intends to
vigorously defend against them.
MESA had previously filed a request for arbitration in June
2009, alleging that Midas had breached its obligations under the
ASA. In a March 2011 ruling, the arbitral panel denied MESA’s claim
for the return of past royalties paid to Midas under the license
agreement and instead awarded damages to MESA solely with respect
to Midas’ alleged failure under the ASA to cooperate in the
improvement of IT systems for the European operations. Following
the conclusion of the arbitration, the license agreement and the
ASA between the parties remained in full force and effect.
“We are extremely disappointed that MESA filed this lawsuit
despite the company’s repeated efforts since the arbitration ruling
to discuss ways in which our two companies can cooperate under the
ASA,” said Alan D. Feldman, Midas’ chairman and chief executive
officer.
Feldman also confirmed that the review of strategic alternatives
by a special committee of the company’s board of directors is
ongoing. Midas has not yet determined what effect the complaint
filed by MESA will have on this ongoing review. Midas said it would
have no additional comments about the review of strategic
alternatives until its board of directors approves a specific
course of action.
Midas is one of the world’s largest providers of automotive
service, offering brake, maintenance, tires, exhaust, steering and
suspension services at nearly 2,300 franchised, licensed and
company-owned Midas shops in 14 countries, including more than
1,500 in the United States and Canada. Midas also owns the SpeeDee
Oil Change business, with 163 auto service centers in the United
States and Mexico.
FORWARD LOOKING STATEMENTS AND RISK FACTORS
This news release contains certain forward-looking statements
that are based on management’s beliefs as well as assumptions made
by and information currently available to management. Such
statements are subject to risks and uncertainties, both known and
unknown, that could cause actual results, performance or
achievement to vary materially from those expressed or implied in
the forward-looking statements. The company may experience
significant fluctuations in future results, performance or
achievements due to a number of economic, competitive,
governmental, technological or other factors. Additional
information with respect to these and other factors, which could
materially affect the company and its operations, is included in
the company’s filings with the Securities and Exchange Commission,
including the company’s 2010 annual report on Form 10-K and
subsequent filings.
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