The management-led buyout of Kinder Morgan Inc. (KMI) sparked a rally in the company’s shares last week (see Daily GPI, May 31). This week it has launched a fusillade of class-action lawsuits that claim shareholders would be stiffed by the $100/share offer, “a grossly inadequate and unfair price.”
Lerach Coughlin Stoia Geller Rudman & Robbins LLP and the law office of Charles J. Piven both filed class actions this week. They join the firm of Wechsler Harwood LLP, which announced a suit last week. Certain officers and directors are charged with violating shareholder rights.
“Instead of attempting to obtain the highest price reasonably available for the company’s stockholders, the complaint alleges defendants spent a substantial effort tailoring the structural terms of the acquisition to meet the specific needs of the management buyout group, which includes the company’s top officers and directors as well as a group of private equity funds,” says a press release from Lerach, et al.
Shortly after the deal was announced, Credit Suisse issued a research note that said, “While we would have hoped for a bit more, we think investors will generally see the $100 proposal as fair, given both the upside involved as well as recognition that interest rate fears over the last three months have eaten into the stock’s valuation (recent ‘buy rated’ price targets have ebbed down, but still remain in the $100-112 range).” Last week some analysts were saying they expected management to sweeten its offer and that the deal would go through.
Buyout news drove the price up to the $100 area. It has traded as high as $103.75 since the buyout announcement. Volume in KMI shares was heavier than average Wednesday afternoon as shares traded around $100.69. KMI’s 52-week low is $78.55. Kinder Morgan policy is to not comment on pending litigation.
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