Flanders shrugs off probes
A Flanders Corp. official said proposed investigations by several law firms to determine if company shareholders are receiving adequate compensation for their shares under an agreement for Insight Equity Holdings LLC to acquire Flanders Corp. are par for the course.
In an interview Tuesday, John Oakley, president and chief financial officer for Washington-based Flanders Corp., said the investigations are nothing more than “fishing expeditions.”
“They’re no different than ambulance chasers, to be honest with you. Read their press releases. What is says is, “We may begin an investigation. If you are a shareholder, contact us.’ They’re just trying to get some money. … That’s what these attorneys do. That’s all they do; they follow transactions around. The first question is: ‘How much will you pay me to go away?’” Oakley said.
When asked if he expected such reaction from the law firms that announced their investigations, Oakley replied, “Correct.”
Asked if he expected the investigations to slow down or stop the sale, he said, “Not at all.”
According to several publications and press releases, Willie Briscoe, a former U.S. Securities and Exchange lawyer, and the securities litigation firm of Powers Taylor, LLP, are investigating the proposed sale of Flanders to Insight. That acquisition was announced by Flanders Corp. on Monday.
A phone call made to Briscoe was not returned Tuesday.
Reuters reports that Faruqi & Faruqi, LLP, a national securities firm based in New York City, is investigating the Flanders Corp. Board of Directors for potential breaches of fiduciary duties related to the pending sale of the company to Insight Equity Holdings for $192 million, minus fees and expenses associated with the sale.
The investigation centers on whether the board breached their fiduciary duties to the company’s shareholders by not conducting a fair and adequate sales process prior to agreeing to the proposed sale, if the proposal undervalues Flanders’ stock and by how much the proposal undervalues Flanders to the disadvantage of Flanders stockholders.
An Internet searched revealed other law firms announcing they intend to conduct similar investigations.
Under the terms of the agreement, upon consummation of the transaction Flanders’ shareholders will receive $4.40 per share in cash for each share of Flanders’ common stock, representing a premium of 39 percent over the average closing share price of $3.17 during the last 30 days ending March 16, and a 42 percent premium over Flanders’ average closing share price of $3.10 during the last 90 days ending March 16.