Bell Microproducts Inc. Investors File Lawsuits

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Company Name(s): 
Bell Microproducts
Case Name: 
Bell Microproducts Deal Case 04/09/2010
Case Status: 
Lawsuit Filed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 
Class Period End: 
Court of Filing: 
California State Court

At least three investors filed lawsuits in California State Court on behalf of current investors in Bell Microproducts Inc. (NASDAQ:BELM) alleging breaches of fiduciary duty by the board of directors of Bell Microproducts Inc. for selling itself too cheaply through an unfair process.

According to the complaint the plaintiff alleges breaches of fiduciary duty by the Board of Directors of Bell Microproducts Inc arising out of their attempt to sell Bell Microproducts Inc. (NASDAQ:BELM) to Avnet, Inc. Bell Microproducts Inc, located in San Jose, California, is a distributor and reseller of data storage and server products and solutions, computer component products and peripherals, as well as a range of software applications. Bell Microproducts Inc. reported in 2007 Total Revenue of $3.94991billion, in 2008 Total Revenue of $3.5795billion, and in 2009 Total Revenue of $3.02117billion with a Net Income of $7.52million.

On Monday, March 29, 2010, Bell Microproducts Inc. (Nasdaq:BELM) announced that it has entered into a definitive agreement to be acquired by Avnet, Inc. in an all cash merger for $7.00 per share or a total transaction value of approximately $594 million is based upon an equity value of approximately $252 million and a Bell debt position, at face value and net of cash, of $342 million at December 31, 2009. According to Bell Microproducts the acquisition has been approved by the Boards of Directors of both companies.

Shares of Bell Microproducts Inc. (BLEM) traded after the announcement at $6.91 per share, and at $5.50 the trading day before the news.

But according the complaint the plaintiff allege that certain “officers and directors of Bell have decided to pursue their own interests” and will the proposed acquisition will benefit certain officers and directors at the expense of Bell’s shareholder, rather then “maximizing shareholder value” for them. The plaintiff alleges, among other things, that the transaction is “unfair and inadequate” and “harmful to Bell’s public stockholders”, because “the company agreed that it will not solicit, initiate, or knowingly encourage any superior proposals from other parties and it would pay a termination fee of $10.5million if it accepted a superior proposal”.