A pending MeadWestvaco merger would put the country’s second-largest packaging firm in Richmond. Photo by Mark Robinson.
Hungry for more class-action cases, law firms from around the country are again targeting another big Richmond merger.
Last month’s announcement of the pending marriage of Richmond-based Fortune 500 MeadWestvaco and fellow packaging giant Rock-Tenn Co. sparked response from law firms across the country.
These firms are all in search of the same thing: a MWV shareholder who disagrees with the deal and is willing to sign on as lead plaintiff for a potential class-action case.
It’s a practice that’s become the norm following the announcement of big deals involving publicly traded companies.
The MWV-Rock-Tenn deal is at least the fourth merger in recent years involving a Richmond company to be targeted by this legal strategy.
Tucker McNeil, director of corporate communications for MWV, said this week the company and its attorneys are well aware of the tactic.
“It’s not unlike any of these firms to troll out there for possible folks to join in a class-action suit,” McNeil said. “It was not news to our legal team by any stretch. They certainly weren’t surprised when it happened.”
MeadWestvaco’s deal, which would create a colossus company with combined $15.7 billion in revenue, was announced Jan. 26.
Within days, at least half a dozen law firms took to the Internet claiming they are investigating the merger and potential claims against the MWV board of directors.
In a merger situation, firms typically argue that the deal may not be in shareholders’ best interest and that they are looking for possible breaches of fiduciary duty and other alleged violations.
Similar language is used in each of the posts, which tell shareholders that they have the option to file a class-action lawsuit.
For example, San Diego law firm Robbins Arroyo said in its release that its investigation “focuses on whether the board of directors at MeadWestvaco is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.”
The firm contends that the $49.13 merger consideration represents a premium of 8.7 percent, based on MWV’s closing price last December.
“This premium is significantly below the average one-month premium of nearly 29.15 percent for comparable transactions within the past five years,” the firm says, adding that the merger consideration “is significantly below the target price of $60” set by a financial analyst in January.
“In light of these facts, Robbins Arroyo LLP is examining MeadWestvaco board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.”
If a lawsuit is filed in such an instance, it typically seeks to either block the deal, force changes in its terms or force settlements that can be potentially lucrative to both the plaintiff and the law firms.
Deals involving Union Bankshares, Owens & Minor and the former Franklin Federal Savings Bank all were subject to similar tactics. And each led to lawsuits filed and cases that ended with varying results.
While no lawsuit had been filed against MWV as of Wednesday, at least two of the law firms’ online posts refer to a complaint filed in Delaware state court. A search of online court records did not produce such a complaint.
Calls made to some of the firms earlier this week were not returned.
Should it close, the stock-for-stock deal will give MWV shareholders control of about 51 percent of the combined company. Richmond would then be home to the country’s second-largest packaging company, behind only International Paper.
McNeil said MWV stands by the numbers in the deal.
“We’ve got fairness opinions,” he said. “Our board is confident what we’re doing is the right thing.”
A pending MeadWestvaco merger would put the country’s second-largest packaging firm in Richmond. Photo by Mark Robinson.
Hungry for more class-action cases, law firms from around the country are again targeting another big Richmond merger.
Last month’s announcement of the pending marriage of Richmond-based Fortune 500 MeadWestvaco and fellow packaging giant Rock-Tenn Co. sparked response from law firms across the country.
These firms are all in search of the same thing: a MWV shareholder who disagrees with the deal and is willing to sign on as lead plaintiff for a potential class-action case.
It’s a practice that’s become the norm following the announcement of big deals involving publicly traded companies.
The MWV-Rock-Tenn deal is at least the fourth merger in recent years involving a Richmond company to be targeted by this legal strategy.
Tucker McNeil, director of corporate communications for MWV, said this week the company and its attorneys are well aware of the tactic.
“It’s not unlike any of these firms to troll out there for possible folks to join in a class-action suit,” McNeil said. “It was not news to our legal team by any stretch. They certainly weren’t surprised when it happened.”
MeadWestvaco’s deal, which would create a colossus company with combined $15.7 billion in revenue, was announced Jan. 26.
Within days, at least half a dozen law firms took to the Internet claiming they are investigating the merger and potential claims against the MWV board of directors.
In a merger situation, firms typically argue that the deal may not be in shareholders’ best interest and that they are looking for possible breaches of fiduciary duty and other alleged violations.
Similar language is used in each of the posts, which tell shareholders that they have the option to file a class-action lawsuit.
For example, San Diego law firm Robbins Arroyo said in its release that its investigation “focuses on whether the board of directors at MeadWestvaco is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.”
The firm contends that the $49.13 merger consideration represents a premium of 8.7 percent, based on MWV’s closing price last December.
“This premium is significantly below the average one-month premium of nearly 29.15 percent for comparable transactions within the past five years,” the firm says, adding that the merger consideration “is significantly below the target price of $60” set by a financial analyst in January.
“In light of these facts, Robbins Arroyo LLP is examining MeadWestvaco board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.”
If a lawsuit is filed in such an instance, it typically seeks to either block the deal, force changes in its terms or force settlements that can be potentially lucrative to both the plaintiff and the law firms.
Deals involving Union Bankshares, Owens & Minor and the former Franklin Federal Savings Bank all were subject to similar tactics. And each led to lawsuits filed and cases that ended with varying results.
While no lawsuit had been filed against MWV as of Wednesday, at least two of the law firms’ online posts refer to a complaint filed in Delaware state court. A search of online court records did not produce such a complaint.
Calls made to some of the firms earlier this week were not returned.
Should it close, the stock-for-stock deal will give MWV shareholders control of about 51 percent of the combined company. Richmond would then be home to the country’s second-largest packaging company, behind only International Paper.
McNeil said MWV stands by the numbers in the deal.
“We’ve got fairness opinions,” he said. “Our board is confident what we’re doing is the right thing.”