Bucyrus International, Inc. Hit By Second Investor Lawsuit Over Buyout

If you are a current investor in Bucyrus International, Inc. (NASDAQ:BUCY) and purchased your BUCY shares prior November 15, 2010, you have certain options and you should contact the Shareholders Foundation, Inc.

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Company Name(s): 
Bucyrus International
Case Name: 
Bucyrus International Deal Case 11/17/2010
Case Status: 
Lawsuit Filed
Affected Securities
NASDAQ: BUCY
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 
11/17/2010
Summary: 

Another investor in Bucyrus International, Inc. (NASDAQ:BUCY) filed a lawsuit against Bucyrus and its Board of Directors in effort to stop the takeover of Bucyrus Intl. by Caterpillar Inc.

The plaintiff alleges that the defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 in connection 1934 in connection with the tender offer by Caterpillar Inc. for Bucyrus.
On Monday, November 15, 2010, Bucyrus International, Inc. and Caterpillar Inc (NYSE: CAT) announced that they have entered into an agreement under which Caterpillar will acquire Bucyrus International in a transaction valued at approximately $8.6 billion (including net debt). Under the terms of the transaction, which has been approved by the boards of directors of both companies, Bucyrus shareholders will receive $92 per share, $7.6 billion in aggregate consisting of all cash. Bucyrus International, Inc said the transaction represents an implied premium of 32 percent to Bucyrus’ share price as of November 12, 2010.
Shortly thereafter the first investor filed a lawsuit in State Court against the members of the board of directors of Bucyrus International, Inc alleging breaches of fiduciary duties. The latest complaint alleges on behalf of all persons who held shares of the common stock of Bucyrus International, Inc. (NASDAQ:BUCY) on November 15, 2010, that the proposed takeover is the product of a fundamentally flawed process, undertaken in breach of the Board’s fiduciary duties, and designed to engineer the sale of Bucyrus to Caterpillar on terms preferential to Caterpillar and provide material benefits to the Company’s insiders. The complaint further alleges that in an attempt to secure shareholder support for the Proposed Merger, on December 8, 2010, defendants issued a materially false and misleading Preliminary Proxy on Schedule 14A, which recommends that Bucyrus shareholders vote in favor of the Proposed Merger, omits and/or misrepresents material information about the unfair sales process Bucyrus International, Inc, conflicts of interest that corrupted the sales process, the unfair consideration offered in the proposed Merger, and the actual intrinsic value of Bucyrus International, Inc on a stand-alone basis and as a merger partner for Caterpillar. This information is material to the impending decision of Bucyrus’s shareholders whether or not to vote in favor of the Proposed Merger, so the plaintiff.

Shares of Bucyrus International, Inc. (NASDAQ: BUCY) traded at roughly $72 per share days before the takeover news. On Monday, Nov. 15, BUCY shares jumped in response to the announcement nearly 30% to $90 per share.

But at least one analyst has projected that Bucyrus’ true value is at least $95 per share and the plaintiff claims that “the $92 per share price significantly undervalues Bucyrus, which has performed well and is expected to continue to do so”. Among other things the plaintiff said that while “[Bucyrus] sales decreased 10% to $645.8million, the Company’s earnings per share grew 21.6%”. Bucyrus International’s 12 month Total Revenue more than tripled between 2006 and 2009. In 2006 Bucyrus International, Inc. reported a 12month Total Revenue of $738.05million and in 2009 $2,651million. Its Net Income over the same time frame increased by more than 450%. While Bucyrus International, Inc. reported in 2006 $70.34million Net Income, it was able to report a Net Income of $312.70million in 2009. For the first three quarters in 2010 Bucyrus International, Inc. reported quarterly Total Revenue of $607.52million, $868.67million, and $937.16million, thus a combined 9month Total Revenue of $2,413.35million. For the first three quarters Bucyrus International, Inc. reported a combined 9month Net Income of 185.79million.