According to the complaint filed on August 4, 2011, the defendants violated state fiduciary laws and federal securities laws in connection with a proposed merger transaction.
On April 28, 2011, Company and a bidder announced a definitive agreement under which the bidder would acquire all of the outstanding shares of the Company in an all stock transaction. Under the terms of the Proposed Transaction, shareholders will receive 0.930 shares of the bidder company’s common stock in exchange for each share of the Company’s common stock. The implied consideration per share based on the closing price of the bidder company’s common stock on the day the deal was announced was $38.70. The Proposed Transaction is valued at approximately $7.9 billion in total equity value.
The plaintiffs allege that the Board has breached their fiduciary duties by agreeing to the Proposed Transaction for grossly inadequate consideration. Specifically, the complaint charges that the Proposed Transaction failed to calculate future growth prospects. Further, the complaint states the Defendants breached their fiduciary duty by agreeing to lock up the Proposed Transaction with deal protection devices that preclude other bidders from making a successful competing offer for the Company. Specifically, pursuant to the merge agreement dated April 28, 2011. The complaint mentions that defendants agreed to: (i) a strict non-solicitation provision that prevents the Company from soliciting other potential acquirors or even in continuing discussions and negotiations with potential acquirors; (ii) a provision that provides the bidder with five business days to match any competing proposal in the event one is made; and (iii) a provision that requires the Company to pay the bidder a termination fee of $200,000,000 in order to enter into a transaction with a superior bidder.
In connection with the Proposed Transaction, on June 27, 2011, the Company filed a joint proxy statement/prospectus on Form S-4 with the United States Securities and
Exchange Commission. The Registration Statement fails to provide the Company's shareholders with material information thereby rendering the shareholders unable to make an informed decision regarding whether to vote in support of the Proposed Transaction. Defendants have violated Sections 14(a) of the Exchange Act, by omitting material facts necessary to render the Registration Statement non-misleading. Defendants have also breached their fiduciary duty of candor by failing to disclose material information to the Company’s shareholders necessary for them to determine whether to tender their shares in support of the Proposed Transaction.
On September 29, 2011, the Court issued an Order staying and administratively closing this case pending resolution of the related action pending in the Circuit Court for Baltimore City.
On July 17, 2012, the Court approved Plaintiff's notice dismissing this action with prejudice pursuant to the settlement and release of substantially identical claims in the parallel action that was pending in the Circuit Court for Baltimore City.