Faruqi & Faruqi, LLP’s national practice focuses on complex civil litigation. The firm practices in the areas of Securities, Merger & Transactional, Shareholder Derivative, Antitrust, Consumer Class Action, and Wage & Hour litigation.
On November 2, 2015, the Company entered into a Purchase Agreement and Plan of Merger (“Merger Agreement”) under which TDK Corporation (“TDK”) will acquire all of the outstanding units of Hutchinson through a newly formed subsidiary of Hydra Merger Sub, Inc. The unit-for-unit transaction is valued at approximately $221 million. The transaction and vote are expected to occur in the first quarter of 2016.
The complaint charges Hutchinson Technology Incorporated, its Board of Directors, and affiliated corporate entities and individuals with violations of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).
Pursuant to the terms of the Merger Agreement, which was unanimously approved by the Company’s Board of Directors (the “Board” or “Individual Defendants”), Hutchinson unitholders will receive $3.62 in cash per share and up to an additional $0.38 in cash under certain circumstances for each unit of Hutchinson they own. $3.62 per share However, the offer is 40% less than the $6.00 per share price target analysts at Craig-Hallum Capital Group LLC issued as recently as April 2015. The offer is also significantly below Hutchinson’s 52-week high stock price of $4.50 per share.
Furthermore, according to the complaint, the Merger Agreement includes a non-solicitation and matching rights provisions which essentially ensure that a superior bidder will not emerge, as any potential suitor will undoubtedly be deterred from expending the time, cost, and effort of making a superior proposal while knowing that TDK can easily foreclose a competing bid.
The complaint also alleges that the preliminary proxy statement (the “Proxy”) filed with the Securities and Exchange Commission (“SEC”) on November 23, 2015 provided materially incomplete and misleading disclosures, thereby violating Sections 14(a) and 20(a) of the Exchange Act. The Proxy denies Hutchinson’s unitholders material information concerning the financial and procedural fairness of the Merger.