Lawyers Circle Apple-AuthenTec Buyout for Shareholder Suit

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Apple vs. ZOMG! MILLIONS!Two law firms have already announced “investigations” of AuthenTec’s board of directors to look for evidence of a breach of fiduciary responsibility regarding Apple’s purchase of the company for $350 million on Friday. Both firms are hoping to land shareholder class actions by showing that AuthenTec’s board undervalued the company in the sale.

In nearly identical verbiage, Levi & Korsinsky and Rigrodsky & Long, P.A. both announced that they were investigating the sale and looking for AuthenTec shareholders to sign up for a suit if it gets launched.

“Under the terms of the transaction, AuthenTec shareholders will receive $8 per share of AuthenTec stock they own,” Levi & Korsinsky said in its announcement. “The transaction has a total approximate value of $350 million. The investigation concerns whether the AuthenTec Board of Directors breached their fiduciary duties to AuthenTec stockholders by failing to adequately shop the Company before entering into this transaction and whether Apple is underpaying for AuthenTec shares, thus unlawfully harming AuthenTec stockholders.”

Along similar lines, Rigrodsky & Long, P.A. said, “The investigation concerns whether AuthenTec’s board of directors failed to adequately shop the Company and obtain the best possible value for AuthenTec’s shareholders before entering into an agreement with Apple.”

The lawsuit threat isn’t technically aimed at Apple, but if they investigations turn into bona fide suits, it remains to be seen if they effect the sale itself.

Many mergers and acquisitions get attorneys sniffing around the deals looking for a breach of fiduciary responsibility by one party or another, and Apple’s penchant for secrecy, enormous cash hoard, and unbelievably high profile exacerbates attention on everything the company does.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

Comments

VaughnSC

I’m not going to look up the numbers, but Apple offered a solid premium over the then-current stock price, which is the stockholder’s valuation by its very definition.

“Oh, but its Apple: they should pay twice the amount of any reasonable valuation, just because they can!”

Sheesh.

Bryan Chaffin

One possible angle for the “investigation” would be that AuthenTec might have gotten more for itself had it let it be known that Apple wanted to buy the firm. In other words, by not starting a bidding war, the board breached its fiduciary responsibility.

I am, of course, just guessing, and am not an attorney, but that was my reading of the words “adequately shop” from both announcements.

Never mind that’s not how Apple works, the attorneys would hope to prove that AuthenTec should have better leveraged the situation.

There’s little risk to the law firms. If there’s no fire under their dreamed up smoke, they’re out a few tens or scores of hours. If there is, they could earn millions in fees by representing the class.

skipaq

This is how every company works. Check the land values in central Florida before and after it became known that a certain Mouse was buying up lots.

iGeorgeC

Parasite lawyers. The cousins of Wall Street bankers etc. Maybe they should have shipped it to Samsung to thwart Apple ? US needs a big trench digger and dig a long trench for Levi, Korsinsky and Rigor-mortinsky. And whilst they’re at ti some or all of wall street. Now that would be a stimulus package as big as the QEII

N8nNC

When you’re looking to sell, you shop yourself around. When a buyer approaches, you don’t (unless it makes you interested in selling). AUTH hadn’t seen this valuation for four years, so no one else had seen it as a buying opportunity. I have a hard time imagining the legs that the lawyers think their claim can stand upon.

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