Apax Partners announced to acquire Bankrate for $571million. An angry investor has filed a proposed securities class action lawsuit in the United States District Court for the Southern District of Florida on behalf of current investors of Bankrate, Inc. (Public, NASDAQ:RATE), who purchased the shares before July 22, 2009, alleging breaches of fiduciary duty in connection with an alleged unfair takeover.
The complaint alleges that in pursuing the unlawful plan to facilitate the Proposed Acquisition, each of the defendants violated applicable law by directly breaching and/or aiding the other defendants' breaches of their fiduciary duties of loyalty, due care, independence, good faith and fair dealing.
Bankrate, Inc. announced on July 22, 2009 that it has entered into a definitive agreement to be acquired and taken private by funds advised by Apax Partners, a global private equity firm with over $35 billion in funds under advice and significant expertise in financial services and media. Bankrate announced that “under the terms of the agreement, Apax will commence a tender offer to acquire all of the outstanding common stock of Bankrate, for $28.50 per share in cash, followed by a merger to acquire all remaining outstanding Bankrate shares at the same price paid in the tender offer”. According to Bankrate, the “offer price represents a premium of 15.8% over yesterday's closing stock price and 18.2% over the average closing price for the previous ten trading days”.
The plaintiff alleges that the offer price under the Merger Agreement is unfair and grossly inadequate, because among other factors, the intrinsic value of Bankrate common stock is materially in excess of $28.50 per share. According to the complaint, this offer price is 32% under the Company's 52-week high of $41.92. The complaint further alleges that if the Proposed Acquisition is consummated at an unjust and grossly inadequate price of $28.50, the defendants will be unjustly enriched at the expense of Bankrate shareholders. The Proposed Acquisition will trigger change in control payments to certain of the Company's officers, including defendant Thomas R. Evans, that amount to tens of millions of dollars. These change in control arrangements provide personal financial incentives to these individuals that are not shared by Bankrate's public shareholders. Certain officers will also be allowed to have an equity stake in the future company after the completion of the Proposed Acquisition - gaining consideration for the Company's future growth and success that Plaintiff and the other Bankrate shareholders are closed out from sharing.
The complaint also alleges that the defendants are also liable for their failure to disclose complete and material information in the recent Form SC 14D9 and the Form SC TO-T (the Tender Offer Documents ) filed with the United States Securities and Exchange Commission ( SEC ) on July 28, 2009. These Tender Offer Documents fail to disclose material information to the Company's shareholders that is necessary to fully consider the merits of the Proposed Acquisition and decide whether to tender their shares.
Bankrate, Inc., located in North Palm Beach, Florida, owns and operates an Internet-based consumer banking and personal finance network. The Company's flagship Website, Bankrate.com, collates data and information on more than 300 financial products and fees, including mortgages, credit cards, automobile loans, money market accounts, certificates of deposit, checking and automated teller machine (ATM) fees, home equity loans, and online banking fees. Bankrate reported in 2007 Total Revenue of $95.59million with a Net Income of $20.05million and in 2008 Total Revenue of $166.85million with a Net Income of $19.62million. RATE shares reached a 52weekHigh of $41.92 per share and traded at $56.50 per share in 2008.