US frozen-food firm Overhill Farms looks set to settle with shareholders that launched legal action over its sale to Bellisio Foods.

Overhill said yesterday (24 July) it had entered into a memorandum of understanding with lawyers for investors that had issued lawsuits in Nevada and California over the deal, which was announced in May.

The shareholders had claimed Overhill’s board had breached their fiduciary duties by “engaging in a flawed sales process” and by agreeing to an “inadequate price”. Overhill agreed to a takeover offer from Bellisio that valued the business at around US$80.9m.

The investors also argued the directors had agreed to provisions in a deal that would preclude another buyer from making a better offer. In their actions, the investors sought an injunction to prevent the deal going through, as well as damages.

Overhill said yesterday the memorandum “contemplates” the two sides will “enter into a stipulation of settlement” over the legal action. The settlement will be subject to court approval.