At least a half-dozen shareholder lawsuits have been filed against Maytag, claiming that its board of directors is cheating investors by failing to get the best price in a proposed $2.1 billion sale of the company, based in Newton.
One of Maytag’s biggest shareholders, Brandes Investment Partners of San Diego, Calif., also showed its dissatisfaction with the deal on Friday, saying in a regulatory filing that it will vote against the proposed purchase.
Brandes owns about 8.4 million shares of Maytag stock, or about 10.5 percent of the company.
Maytag, the nation’s third-largest appliance maker, announced May 19 that its board of directors had agreed to a deal in which an investor group led by New York-based Ripplewood Holdings would purchase Maytag, paying stockholders $14 a share.
The lawsuits want a judge to stop the deal.
John Daggett, a Maytag spokesman, said the company is aware of a number of lawsuits, and “we believe they are completely without merit.”
Shareholder lawsuits in major corporate deals are not uncommon, said Des Moines lawyers Phil Watson and Richard Malm, whose practices include corporate law.
Malm said he wasn’t familiar with the Maytag case, but in general, he said, such lawsuits can often hold up a sale.
Watson, who also was not involved in the case, said such suits rarely delay a purchase.
Neither was surprised.
“In a deal that big, you would expect some shareholders to be unhappy and to bring some litigation,” Watson said.
Six shareholder lawsuits have been filed in a court in Delaware, where Maytag is incorporated, although its headquarters is in Newton.
The lawsuits were filed by five individuals and one company, Market Street Securities, all owners of Maytag stock, according to the lawsuits, which don’t say where the stockholders are located.
The individuals are David Birnbaum, Hindie Silver , Louis Rubinstein, David Roitman and Herbert Resnik. They are represented by different Delaware and New York law firms.
The lawsuits seek to be declared a class action on behalf of all Maytag shareholders, except the company’s board of directors.
Named as defendants are Ralph Hake, Maytag chairman and chief executive, 10 other members of the board of directors, and Maytag Corp.
Roitman’s lawsuit alleges that the proposed deal substantially undervalues shares of Maytag stock, unfairly benefits Maytag insiders, and unfairly favors Ripplewood over competitive bidders.
The proposed per-share sale price “seeks to take advantage of a downturn in Maytag’s share price caused largely by the individual defendants’ poor management of Maytag,” the lawsuit alleges.
The defendants also failed to hire an unbiased financial adviser, choosing instead Lazard Ltd., Roitman’s lawsuit says.
The lawsuit alleges that Maytag officials “must have been well aware” that Ripplewood’s founder and CEO, Timothy C. Collins, is a former Lazard vice president.
Maytag and its board also failed their obligation to get the highest possible value for shareholders’ holdings, the lawsuit said.
Some of the lawsuits ask a judge to direct the defendants to get the highest possible price in any proposed sale. The suits seek unspecified damages.
Two of the lawsuits also ask the court to allow a stockholders committee to have a role in any proposed deal.
David MacGregor, an analyst with Longbow Research in Independence, Ohio, said legal actions to block the deal may be unnecessary, because shareholders may reject the bid anyway.
“There are a lot of shareholders who are unhappy with this deal. Basically, what we’re hearing is that a lot of these shareholders may end up voting against the deal,” MacGregor said.
Brandes, in a filing with the U.S. Securities and Exchange Commission, said the $14 bid was too low. The firm may engage in discussions with other shareholders and parties “to explore options to enhance shareholder value,” the filing said.
Brent Fredberg, a senior research analyst with Brandes, said he sees no shareholder revolt brewing over the purchase.
“We feel that the offer price is not adequate,” Fredberg said.
Brandes, a private asset management firm, has not spoken with Ripplewood or Maytag, he said, but would like to hear by the time Maytag files its proxy statement why shareholders should accept $14.
Register business writer S.P. Dinnen contributed to this article.
From The Des Moines Register