An angry investor has filed a proposed securities class action lawsuit in Delaware Chancer Court on behalf of current investors in FiberNet Telecom Group, Inc. (Public, NASDAQ:FTGX), who purchased their FTGX shares before May 28, 2009, over alleged breaches of fiduciary duty and other violations of state law by the Board of Directors of FiberNet.
According to the complaint the plaintiff alleges breach of fiduciary duty and other violations of state law by the Board of Directors of FiberNet Telecom Group, Inc. (Nasdaq: FTGX).
FiberNet Telecom Group, Inc. (Nasdaq: FTGX) announced that it has entered into a definitive Agreement and Plan of Merger with Zayo Group, LLC, a regional provider of bandwidth and telecom services to carrier, enterprise and government customers and Zayo Merger Sub, Inc., a wholly-owned subsidiary of Zayo Group. Each share of FiberNet Telecom Group, Inc. common stock issued and outstanding immediately prior to the effective time of the merger will be entitled to receive $11.45 in cash for a total deal value of approximately $87 million.
According to the lawsuit the transaction appears to be unfair, among other things, given that FiberNet Telecom Group, Inc. (Nasdaq: FTGX) shares were trading at $11.68 a share as recently as April 07, 2009. Shares of Fibernet traded at $11.54 per share on September 23, 2008 and $11.43 on April 6, 2009. The plaintiff also alleges that at least one analyst has placed a $12 price target on FiberNet stock and (iii) the Company announced that it received a proposal to acquire the Company for $12.50 per share. FiberNet Telecom Group, Inc. provides interconnection services enabling the exchange of voice, video and data traffic between multiple, global networks.
The Company owns and operates co-location facilities and diverse transport routes in the gateway markets of New York/New Jersey, Los Angeles, Chicago and Miami. FiberNet Telecom Group, Inc. is located in New York and had $49.78million in total revenue in 2007 and $58.29million in total revenue in 2008. Shares of FiberNet (FTGX) traded recently as high as $11.54 per share, thus higher than the proposed takeover price. Shares of FiberNet were down from a 52weekHigh of $12.20 per share and $39 per share in 2003. Shares of FiberNet reached prices of $117 per share in 2002, $1931.40 per share in 2001 and $7350 per share in 2000.