An investigation for investors of LTX-Credence Corporation (NASDAQ:LTXC) was initiated after LTX-Credence Corporation announced it has agreed to be taken over by Verigy Ltd. (NASDAQ: VRGY). The investigation concerns whether the offer and sale process are unfair to LTX-Credence investors and certain officers and directors at LTX-Credence breached their fiduciary duties.
The investigation by a law firm concerns whether Verigy Ltd., LTX-Credence Corporation and certain of its officers and directors breached their fiduciary duties owed to LTX-Credence Corporation (NASDAQ:LTXC) investors in connection with the proposed takeover.
Milpitas, California based LTX-Credence Corp (NASDAQ: LTXC) and Verigy (NASDAQ: VRGY) announced on November 18, 2010 that they have entered into a merger agreement under which under which LTX-Credence would become a wholly owned subsidiary of Verigy or Verigy and LTX-Credence would become wholly owned subsidiaries of Holdco, a newly created subsidiary. The transaction is valued at approximately $420 million. Under the terms of the agreement, LTX-Credence stockholders will receive 0.96 shares of Verigy (VRGY ) stock or Holdco stock for each share of LTX-Credence/LTXC common stock held. Verigy shares closed at $8.91 the day prior to the announcement of the merger agreement. Based on a Verigy share price of $8.91 per share LTX-Credence Corp shareholders would receive an equivalent of $8.55 per LTXC shares they hold.
Shares of LTX-Credence Corporation traded at roughly $6.50 per share days before the announcement and jumped to $7.92per share in response to the announcement.
But the investigation by a law firm concerns whether the offer undervalues LTX-Credence Corporation and the sale process is unfair to the shareholders of LTX-Credence Corporation (NASDAQ:LTXC).
At least one analyst has set a price target of $18.00 per share for LTX-Credence stock and the mean price target for LTX-Credence stock set by 5 analysts is $12.60 per share. In addition LTX-Credences 12 month Total Revenue went from $147.64million reported on July 31, 2007 to $219.08million reported on July 31, 2010.
Therefore the investigation concerns whether the LTX-Credence Board of Directors undertook an adequate and fair sales process to obtain fair consideration for all shareholders of LTX-Credence Corporation (NASDAQ:LTXC) and breached their fiduciary duties to LTX-Credence (LTXC) shareholder by failing to adequately shop the Company before entering into the transaction with Verigy Ltd.