Just when you thought it was all said and done, the saga continues! Permira has acquired Ancestry.com. One would think that was the end of the story, but no. Shareholders of Ancestry.com are suing about this sale. They feel that they were shortchanged in this deal.
Permira Advisors, LLC., acquired Ancestry.com for around $1.6 billion. Permira will pay $32.00 a share for Ancestry.com stock. That amount is 41% higher than the closing price of the stock on June 5, 2012, which was the last day of trading before it was reported that Ancestry.com had hired a financial adviser for the purposes of a potential sale. The adviser was Qatalyst Partners LLC.
The buyout group was led by Permira, and it included Ancestry.com’s co-investors. It also included some members of Ancestry.com’s management, including Chief Executive Tim Sullivan and Chief Financial Officer Howard Hochhauser. Also included in the buyout group was Spectrum Equity, Global Generations International Inc., and Global Generations Merger Sub. Spectrum Equity is the largest shareholder of Ancestry.com stock. It has a 30% stake.
Shareholders have now filed a lawsuit against Ancestry.com saying that the company passed over a better offer to buy, and that this shortchanged the investors. The suit was filed in the Delaware Chancery Court in Wilmington, Delaware, by shareholder John Heck.
John Heck feels “the consideration shareholders will receive is inadequate”. He also feels that the shareholders are being “unfairly cashed out” based upon Ancestry.com’s recent performance. He has asked the court to block the buyout and to consider awarding damages and legal fees to the shareholders.
A Michigan based pension fund called Pontiac General Employees Retirement System has also filed a lawsuit against Ancestry.com over the buyout. They feel that Spectrum Equity Investors, which is one of Ancestry.com’s largest shareholders, “has used its position to dominate company directors and push the $32.00 a share offer”.
“At Spectrum’s insistence, Ancestry.com’s directors rejected a $35.00 a share offer for the genealogy company to back Permira’s $32.00 a share bid” said the pension fund’s lawyers. Court documents state that about 5 of the 9 members of the board have ties to Spectrum or senior management. The fund’s lawyers also said: “The board entered an underpriced deal with the buyout group in violation of duties owed to the company’s public shareholders.”
Heather Erickson, an Ancestry.com spokeswoman had this to say:
“On Oct. 26, 2012, we became aware of a putative stockholder class action lawsuit that was filed against Ancestry.com an Ancestry.com’s board of directors in the Delaware Court of Chancery. The lawsuit alleges, among other things, that the members of the Ancestry.com board of directors breached their fiduciary duties in connection with the approval of Ancestry.com’s acquisition by Permira. Ancestry.com and its directors believe this lawsuit is without merit.”
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