According to a complaint filed on October 7, 2011, the Defendants violated Federal Securities Laws in connection with a proposed merger.
On August 16, 2011, Bidder Company and Target Company jointly announced that they had entered into a definitive agreement pursuant to which Bidder would acquire the stock of target for $14.85 per share, or approximately $440 million. Plaintiffs assert that under the terms of the transaction, Target’s shareholders would receive $14.85 in cash per share of common stock.
However, on August 24, 2011 Target Company revealed that it received an unsolicited-non binding proposal from a Third Party company offering to acquire the stock of target for $15.50 per share in an all cash transaction. Target Company subsequently announced on September 22, 2011 the definitive version of the Third Party offer, as well as the fact that the Third Party Company proposed to finance the deal with $128 million in equity and $410 million in debt pursuant to signed commitment letters.
Then, on September 27, 2011, Target Company and Bidder Company jointly announced that they were amending the original Merger Agreement, and that an affiliate of Bidder Company would acquire all of the outstanding shares of Target held by co-founders and other Defendants for $15.00 per share in cash, and would acquire all other outstanding shares of Target for $16.60 per share in cash, for an aggregate purchase price of approximately $455 million, which was claimed to be the financial equivalent to the Third Party offer.
However, on September 28, 2011, Target received a revised unsolicited bid from the Third Party Company pursuant to which it now offering to acquire all of the outstanding shares of Target held by individual Defendants, together with affiliates and members of their family, for $15.10 per share in cash, and to acquire all other outstanding shares of Target for $18.00 per share in cash, for an aggregate purchase price of approximately $471 million, which is financially equivalent to the acquisition of all of the outstanding shares of Target for $16.01 per share in cash.
Despite offering a higher price than the Bidder Company, the Target’s Board of
Directors announced on September 28, 2011 that they had rejected the revised Third Party offer in favor of the Amended Merger Agreement
with Bidder Company.
The special meeting of shareholders is scheduled for October 17, 2011, and the transaction is expected to close in the fourth quarter 2011.
The plaintiffs claim that in facilitating the acquisition of Target by Bidder for grossly inadequate consideration and through a flawed process, specifically, in rejecting the Third Party offer, which is financially superior, each of the Defendants breached and/or aided the other Defendants’ breaches of their fiduciary duties.
In addition, by making misleading statements and material omissions in the Company’s preliminary proxy statement dated September 1, 2011, its Definitive Proxy Statement filed on September 12, 2011, and in the Definitive Additional Materials filed on October 3, 2011, Defendants violated Sections 14(a) and
20(a) of the Exchange Act.
The complaint charges that the Proxy Statements omit material information thereby rendering shareholders unable to cast an informed vote regarding whether to approve the terms of the Proposed Transaction. For example, the Proxy Statements omit and/or misrepresents material information concerning, among other things: (a) the sales process for the Company; (b) the data and inputs underlying the financial valuation exercises that purport to support the so-called “fairness opinion” provided by Target’s financial advisor; (c) details concerning Target’s financial advisor’s potential conflict of interest, including the amount of compensation received for services it has provided to Bidder; and (d) details on why the Board, including certain individual Defendants, concluded that Bidder had the superior offer when the Third Party Company’s offer was financially superior.
On February 3, 2012, the plaintiff filed a notice of voluntary dismissal without prejudice pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i) as to this case.