Challenge to Naphtha-Isramco Buyout Advances Against Businessman

The Israeli businessman who took oil company Isramco Inc. private through a $96.5 million merger with another of his affiliates, Naphtha Israel Petroleum Corp., must face shareholder litigation over the deal, a Delaware judge ruled Tuesday.

Vice Chancellor Sam Glasscock III let the case advance in Delaware Chancery Court against Haim Tsuff, the controlling stockholder of both companies. Although investors approved the transaction, the allegations make it plausible their consent was uninformed, he found.

Even if Tsuff didn’t intentionally prolong a separate arbitration over oil-field royalties “to keep Isramco’s value artificially reduced” throughout the merger process, as the lawsuit by ...