A class-action lawsuit alleges that Waste Industries USA, Raleigh, N.C., and its Board of Directors breached their fiduciary duties to shareholders in approving a $544 million deal to take the company private. Specifically, the suit claims the sale price is unfair and inadequate because, among other things, the intrinsic value of Waste Industries' common stock is materially in excess of the amount offered, giving due consideration to the company's growth and anticipated operating results, net asset value and future profitability.
On Dec. 18, Waste Industries announced that it had reached a definitive merger agreement with an investment group led by Lonnie Poole Jr., the company's founder and chairman; Jim Perry, the company's president and CEO; and financial partners Macquarie Infrastructure Partners and Goldman Sachs. As part of the transaction, the group agreed to pay $38 for each outstanding share, an increase from the group's original offer of $36.75 per share and a 33 percent premium from the closing price on Oct. 22, when the offer was first announced. A day after the agreement was announced, the suit was filed in Superior Court of Wake County, N.C. However, the suit is based on the original offer of $36.75.
Waste Industries denies the allegations, and issued a statement from D. Stephen Grissom, the company's chief financial officer. We don't comment on pending litigation other than to report such litigation in our SEC filings, but I will point out that the complaint filed does not even reference the merger consideration that was announced on Dec. 18, Grissom said. When the initial offer was announced, the group pointed to an intense focus by investment analysts and public shareholders on short-term quarterly earnings as one of the main reasons for transitioning back to a private company.