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  1.    #1  
    I read this yesterday, and am surprised no one has started a thread on it yet. I found it while looking at palm and hp's stock on the top stocks app (good app btw)



    Palm Investor Sues Over ‘Unfair’ Hewlett-Packard Deal (Update1) - BusinessWeek

    May 6 (Bloomberg) -- Directors at Palm Inc., the money- losing handset maker that agreed to be bought by Hewlett-Packard Co. for $1.2 billion, were sued by an investor over claims the deal would cheat holders of common shares.
    Palm directors breached their fiduciary duties by agreeing to a deal that “unfairly favors” holders of preferred Series B shares, investor Steve Ubaney said in a complaint filed yesterday in Delaware Chancery Court in Wilmington.
    “The proposed transaction is the product of a flawed sales process and is being consummated at an unfair price,” lawyers for Ubaney said in the complaint.
    Hewlett-Packard announced plans to buy Palm on April 28 in a deal that will pay common stockholders $5.70 a share in cash. Elevation Partners LP, Palm’s biggest investor, stands to get $485 million for its preferred shares and warrants under the proposal. The preferred stock is priced at $8.50 a share.
    Elevation, the Menlo-Park, California-based investment firm whose partners include U2’s Bono and Silver Lake co-founder Roger McNamee, first invested in Palm in June 2007, buying $325 million in convertible preferred shares. The firm has since invested another $135 million through preferreds, warrants and common shares.
    Elevation isn’t entitled to additional money for its preferred shares under the terms of a deal signed with Palm in 2007, Ubaney said in the complaint. Under that deal, Elevation is only entitled to recover the same amount as common stockholders in a merger, according to the complaint.
    Elevation’s Share
    Elevation is entitled to receive $5.70 for each of its 38.2 million shares for a total of about $217 million, according to the complaint.
    Lynn Fox, a Palm spokeswoman, didn’t immediately return a phone message seeking comment.
    As a result of the directors’ breaches of fiduciary duty, common shareholders “will not receive their fair portion of the value of Palm’s assets and will be prevented from benefitting from a value-maximizing transaction,” Ubaney said in the complaint.
    Ubaney, who is seeking to represent other investors, asked for a court order blocking the deal plus unspecified damages.
    Palm, based in Sunnyvale, California, fell 2 cents to $5.75 in Nasdaq Stock Market trading at 2:12 p.m. in New York. Hewlett-Packard fell $2.55, or 5 percent, to $48.38.
    The case is Steve Ubaney v. Jonathan Rubinstein, CA5459, Delaware Chancery Court (Wilmington).
    --With assistance from Connie Guglielmo and Ari Levy in San Francisco. Editors: Michael Hytha, Peter Blumberg.
    To contact the reporter on this story: Sophia Pearson in Wilmington, Delaware, at spearson3@bloomberg.net

    Discuss
  2. #2  
    Just my opinion, but I'd say it's a pointless lawsuit.

    Losing money is simply one of the risks of investing. Sure, one company can take over another and the stock can "split", essentially doubling your shares and profits..... or, as in this case, a company who isn't doing so well can decide to sell for a loss, thereby losing money for all of their investors. It's all part of the game that you agree to play as soon as you hit that "buy" button.
  3. #3  
    I'm sorry, I did not bother reading the whole article, but I do work in the securities business (and have for almost 20 years). I read the first couple of lines and it turned into blah, blah, blah.

    This happens in every buyout/takeover known to mankind. Shoot some people (or lawyers "representing the public") will sue because they did not like a compay's quarterly earnings. I would not be concerned about this AT ALL!!!!
  4. #4  
    ”America, land of the lawsuit! God bless her!” -Steve Dallas (Bloom County by Berkeley Breathed)
  5. #5  
    Let's hope this doesn't get in the way of the acquisition. I'm not familiar with the process, but I'm wondering if this kind of thing isn't pretty common.

    From the article, it sounds like Elevation Partners would be the losers here, and that if the suit is successful it would force HP to lower the amount offered for their preferred stock to $5.70. It doesn't necessarily sound like it would automatically raise the price to common shareholders, although HP could do that and keep the deal cost-neutral.

    Of course, HP could also walk away from the deal, or offer more money overall. If they do walk away, then Palm is probably dead and common shareholders will lose even more. They are, after all, getting a premium over the stock's recent value, and indeed the price had gone up a bit on all of the acquisition rumors. I'd think that as a group they'd rather take $5.70 a share than the probably <$2.00 a share that the stock will fall to pretty much immediately.

    I'm thinking, though, that HP probably has a top end to what they're willing to spend that's somewhere north of $1.2 billion. The worst thing is how this could delay the closing of the deal and thus the ability for Palm to make progress with HP's resources.
    Treo 600 > Treo 650 > HTC Mogul (*****!) > HTC Touch Pro (***** squared!) > PRE! > Epic
  6. #6  
    Quote Originally Posted by ScorpionSoul View Post
    Just my opinion, but I'd say it's a pointless lawsuit.

    Losing money is simply one of the risks of investing. Sure, one company can take over another and the stock can "split", essentially doubling your shares and profits..... or, as in this case, a company who isn't doing so well can decide to sell for a loss, thereby losing money for all of their investors. It's all part of the game that you agree to play as soon as you hit that "buy" button.
    Well, according to the article, Elevation Partners is getting more than common shareholders, $8.50/share vs. $5.70/share. If they'd indeed signed an agreement to take no more than common shareholders given an acquisition (the article says "merger," is this the wiggle room?), then there's a potential breach here.

    Again, as I said above though, I don't think common shareholders get more from this lawsuit, rather Elevation simply gets less. And I doubt they'd fight it, because I'm sure they'd rather get $5.70/share than much closer to nothing.
    Treo 600 > Treo 650 > HTC Mogul (*****!) > HTC Touch Pro (***** squared!) > PRE! > Epic
  7. #7  
    Quote Originally Posted by HMCH View Post
    I'm sorry, I did not bother reading the whole article, but I do work in the securities business (and have for almost 20 years). I read the first couple of lines and it turned into blah, blah, blah.

    This happens in every buyout/takeover known to mankind. Shoot some people (or lawyers "representing the public") will sue because they did not like a compay's quarterly earnings. I would not be concerned about this AT ALL!!!!
    THANK YOU...

    it's nice to get some informed opinions.
  8. #8  
    Quote Originally Posted by HMCH View Post
    I'm sorry, I did not bother reading the whole article, but I do work in the securities business (and have for almost 20 years). I read the first couple of lines and it turned into blah, blah, blah.

    This happens in every buyout/takeover known to mankind. Shoot some people (or lawyers "representing the public") will sue because they did not like a compay's quarterly earnings. I would not be concerned about this AT ALL!!!!
    Yeah, I was thinking it might be pretty common. Thanks for the clarification.
    Treo 600 > Treo 650 > HTC Mogul (*****!) > HTC Touch Pro (***** squared!) > PRE! > Epic
  9.    #9  
    Quote Originally Posted by HMCH View Post
    I'm sorry, I did not bother reading the whole article, but I do work in the securities business (and have for almost 20 years). I read the first couple of lines and it turned into blah, blah, blah.

    This happens in every buyout/takeover known to mankind. Shoot some people (or lawyers "representing the public") will sue because they did not like a compay's quarterly earnings. I would not be concerned about this AT ALL!!!!
    Thanks for the insight, thats why I posted the article, as I am not an expert on this type of thing. This is the first time I've ever payed any attention to a buy-out or "merger" whatever you want to call it.
  10. #10  
    PalmInfoCenter had an article on this....

    Palm Sued Over HP Deal Stock Spat
    My device history:

    - Jim J.

    (On Sprint for many years)
  11. #11  
    and on this link too:

    Second lawsuit tries to block HP/Palm deal


    http://www.electronista.com/articles....hp.palm.deal/

    I really hope it comes to a happy ending.

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