Saturday, August 10, 2013

Here are the shareholders fighting the Belo deal

When one company moves to buy another, it's almost a dead certainty that shareholders will go to court to block the deal or change the terms so they get more money. Gannett's surprise offer June 13 to buy TV company Belo for $1.5 billion in cash plus $715 million in debt is no exception.

Indeed, the ink was barely dry on the announcement when two Dallas firms -- the Brisco Law Firm and Powers Taylor -- put out a press release, saying they were investigating the deal and were trolling for aggrieved shareholders for a potential lawsuit.

Firms like these always seek class-action status, meaning they'd represent hundreds or even thousands of shareholders, with court approval. If they win, the firms generally get a big cut of any financial settlement or court award.

I don't write about these kinds of fishing expeditions until they gain some traction.

But now Corporate has singled out four lawsuits in the new quarterly 10-Q statement to the U.S. Securities and Exchange Commission. As companies inevitably do, Gannett sought to assure stockholders, writing: "The company believes these lawsuits are meritless and intends to vigorously defend all pending actions relating to the merger."

What I find interesting is that three of the plaintiffs aren't the usual suspects reeled in by bottom-fishing law firms, such as John and Jane Doe individuals, or unions with an ax to grind. Instead, they're public pension funds.

Maybe their claims are meritless, and maybe they aren't. It will be up to the courts to decide. Meanwhile, GCI and Belo are proceeding with the deal, which they expect will close by the end of the year.

From the 10-Q
Here's what GCI told shareholders:

Since the announcement of Gannett’s acquisition of Belo Corp. on June 13, 2013, Belo, Belo’s directors and the company have been named as defendants in four substantively similar putative class action lawsuits brought by and on behalf of shareholders of Belo. The actions are:
  • Jacob Hulsebus v. Belo Corp., et al., Cause No. DC-13-06601 (District Court of Dallas County, Texas), which was commenced on June 14, 2013
  • IBEW Local 363 Pension Trust Fund, et al. v. Belo Corp., et al., Civil Action 8649-VCL (Delaware Chancery Court), which was commenced on June 17, 2013 (the IBEW Case)
  • Oakland County Employees’ Retirement System v. Belo Corp., et al., Civil Action No. 8677-VCL (Delaware Chancery Court), which was commenced on June 24, 2013 (the Oakland Case)
  • Norfolk County Retirement System and Plymouth County Retirement System. v. Judith L. Craven, et al., C.A. No. 8732-VCL (Delaware Chancery Court), which was commenced on July 16, 2013 (the Norfolk County Case). 
The IBEW Case, the Oakland Case and the Norfolk County Case have been consolidated into In re Belo Corp. Stockholders Litigation, C.A. No. 8649-VCL (Delaware Chancery Court).

The actions allege, among other things, that Belo’s directors breached their fiduciary duties in connection with the merger. In addition, the plaintiffs allege that the preliminary proxy statement filed by Belo in connection with the stockholders’ meeting to approve the merger fails to provide all material information and/or provides misleading information to Belo’s stockholders.

The actions allege that the company aided and abetted the alleged breaches of fiduciary duty. The actions seek, among other things, to enjoin the merger.

1 comment:

  1. The fact the acquirer's stock went up would seem to be prima facie evidence the price was too low, would it not?


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