According to Securities and Exchange Commission filings, the suits are asking for more detail on the negotiations with Tyco. The current filings say that the company started negotiations back in 2009, when a proposed joint venture fell through.
ADC entered into a memorandum of understanding with the plaintiffs to provide more information on the background of the merger negotiations. One issue for the plaintiffs is whether there were alternatives available to ADC.
The three lawsuits all argue that ADC did not explore alternatives to a sale thoroughly enough. One takes issue with the "lock up" provisions, such as the $38 million termination fee, which it says effectively blocked other bidders. The other suits point to the company's financial results, saying that $12.75 per share does not reflect fair value for the company.
One of the suits says the results from the third quarter of 2010 actually beat analysts' estimates; those results were reported Aug. 4. Third-quarter profit was $75.8 million, or 68 cents per share, versus $6.8 million, or 7 cents a share, the year before. On that basis the price offered by Tyco seems too low, the suit says.
ADC's stock was trading between $5 and $9 per share over the past year, until the merger talks advanced in July and the stock shot up past $12. ADC went into the Labor Day weekend at $12.68.
If the plaintiffs agree to the terms of the settlement, the company says, then the merger will go through.
International Business Times, The Global Business News Leader
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