On Monday, the Shareholders Foundation, Inc. (San Diego, Calif., U.S.A.) announced that a lawsuit was filed in State Court for current investors of Tekelec (Morrisville, N.C., U.S.A.) in an effort to block the proposed going private offer of Tekelec.
Last week, Tekelec announced that it has entered into an agreement to be acquired by a consortium led by Siris Capital Group, LLC (New York). The transaction is valued at approximately $780 million. Under the terms of the proposed transaction, all outstanding shares of Tekelec’s common stock will be acquired for $11.00 per share in cash. Tekelec said the $11 offer represents an 11% premium over the closing price on November 4, 2011, and a 38% premium over the 30 day trading average closing price of Tekelec common stock.
However, the plaintiffs allege the $11 offer undervalues the company. The plaintiffs say that in October 2011, Tekelec shares climbed from a close of $5.70 on October 3rd to a high of $10.36 on October 27th, an increase of approximately 80% in the span of one month.
Shares of Tekelec allegedly traded as early as February at $12.04 and January at $13.28 per share, leaving certain Tekelec’s stockholders with no premium, but asking them to hand over their Tekelec stocks at a discount, says the Shareholder Foundation. According to one analyst, the target price for Tekelec stocks should be at $16 per share.
According to the Shareholders Foundation, the plaintiffs claim that the defendants further breached their fiduciary duties by agreeing to preclusive deal protections devices, such as a no-solicitation, a matching right, and a non-mutual $15 million termination fee provision. The plaintiffs argue that this can further diminish the chances of obtaining maximum value for the company's shareholders by collectively precluding any competing offers for Tekelec.
Tekelec had no comment, saying it does not comment on ongoing litigations.