The announcement by PRIMEDIA Inc. that it agreed to a takeover by affiliates of TPG Capital has prompted an investigation on behalf of investors of PRIMEDIA Inc. (NYSE:PRM) concerning whether the proposed acquisition is unfair to NYSE:PRM stockholders and whether certain directors and officers breached their fiduciary duties.
The investigation by a law firm concerns whether certain directors and officers at PRIMEDIA Inc. (Public, NYSE:PRM. or others breached their fiduciary duties in connection the proposed merger.
On May 16, 2011, PRIMEDIA Inc. (NYSE: PRM) announced that it has entered into an agreement to be acquired by affiliates of TPG Capital. Under the terms of the agreement, holders of the outstanding common shares of PRIMEDIA will receive $7.10 per share in cash, representing a transaction enterprise value of approximately $525 million.
Following the takeover proposal shares of PRIMEDIA Inc. (NYSE:PRM) rose from $4.38 on May 13 to $7.01 per share.
However, PRIMEDIA Inc. has performed well for its investors in the past. Even though its 12months Total Revenue decreased over the past four annual filing periods its Net Income rose from $3.49million in 09 to $18.26million in 2010.
Therefore the investigation concerns whether the PRIMEDIA Board of Directors undertook an adequate and fair sales process to obtain fair consideration for all shareholders of PRIMEDIA Inc. (NYSE:PRM) and breached their fiduciary duties to PRIMEDIA (PRM) shareholder by failing to adequately shop the Company before entering into the transaction.
PRIMEDIA Inc said that stockholders holding approximately 58% of the outstanding PRIMEDIA common stock have already executed a written consent approving the transaction.
The investigation concerns also whether affiliates of TPG Capital would underpay for NYSE:PRM shares, thus unlawfully harming PRIMEDIA stockholders.
Share prices for Primedia grew substantially over the past years. Shares of PRIMEDIA Inc. rose from as low as $0.89 per share in 2008 to $5.38 in February 2011.
A potential class action lawsuit would seek to maximize the amount of money and information NYSE:PRM shareholders would receive in a buyout, so the law firm.