(Dec. 23) A class action lawsuit has been filed against Nash Finch Co., Edina, Minn., on behalf of its stockholders.

The suit, filed Dec. 19 in U.S. District Court, alleges that Nash Finch misled shareholders to artificially inflate the price of the company’s common stock.

The suit was filed on behalf of investors who bought stock from Feb. 24 — when the company agreed to pay Wis.-based Roundy’s Inc. $225 million for two distribution divisions and two supermarkets in Indiana and Ohio — through Oct. 20, when Nash Finch lowered its earnings forecast for 2005.

The lawsuit also names chief executive officer Ron Marshall and chief financial officer and senior vice president LeAnne Stewart as defendants.

Nash Finch said on its Web site “the lawsuit is without merit” and the company “intends to vigorously defend” itself. Stewart could not be reached.

Nash Finch originally estimated 2005 earnings would range from $3.70 to $3.80 per share. The company revised its forecast Oct. 20, saying the numbers would range from $3 to $3.25. At the time, Marshall said the Roundy’s acquisition had resulted in “a lack of focus in our core business.” The result, he said, was “serious erosion in retail and wholesale gross profit margins.”

Nash Finch stock fell $12.76 per share from its closing price of $42.08 on October 20 to $30.04 on Oct. 21.

The suit, filed by Milberg Weiss Bershad & Schulman LLP, New York, alleges that Nash Finch wanted to sell more than $300 million in notes in a private placement and that company insiders dumped more than $17 million privately held shares.

The problem, according to the lawsuit, is that while Nash Finch reported the Roundy’s acquisition would add nearly $1 billion in annual sales and save $10 million in costs, “the defendants knew, or recklessly disregarded” several factors, including the fact that Nash Finch was operating below expectations and that the company had significantly under-reserved for the acquisition.

On Nov. 10, Nash Finch reported its net third-quarter earnings were $11 million, or 83 cents per share, down from $14.6 million and $1.15 per share during the third quarter of 2004. Nash Finch stock fell 8 cents to close at $25.01 on Dec. 20, the day after the lawsuit was filed. The price had risen to $26.05 by Dec. 22.

Nash Finch’s wholesale business serves independent retailers and military commissaries in 28 states, Europe, Cuba, Puerto Rico, Iceland, the Azores and Honduras. The company reported nearly $4 billion in sales in 2004. Nash Finch also operates more than 80 retail stores under the Econofoods, Family Thrift Center and Sun Mart names.