Georgia Gulf Corporation (NYSE:GGC) Investor Files Lawsuit In Favor Of The Takeover Proposal

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Company Name(s): 
Georgia Gulf
Case Name: 
Georgia Gulf Deal Case 01/27/2012
Case Status: 
Lawsuit Filed
Affected Securities
NYSE: GGC
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 
01/27/2012
Summary: 

San Diego, Jan. 30, 2012 (Shareholders Foundation) -- An investor in Georgia Gulf Corporation (NYSE:GGC) shares filed a lawsuit against directors of Georgia Gulf Corporation alleging they failed to act in good faith and the best interests of the company's shareholders and failed to take steps reasonably required to maximize shareholder value.

On January 13, 2012, Westlake Chemical Corporation (NYSE: WLK) announced that it has submitted a proposal to Georgia Gulf Corporation (NYSE: GGC) to acquire all of the outstanding shares of Georgia Gulf for $30.00 per share in cash. Westlake Chemical Corporation said the $30offer represents a 51% premium to Georgia Gulf’s 30-day volume-weighted average share price of $19.82.

Following the takeover proposal shares of Georgia Gulf Corporation (Public, NYSE:GGC) jumped from slightly below $25 per share On Jan 12, 2012 to to $33.42 per share on Jan 13, 2012, thus above the current $30offer. Furthermore, shares of Georgia Gulf Corporation (Public, NYSE:GGC) traded as recently as April 26, 2011 as high as$40.09 per share, thus well above the current offer. In addition at least one analyst has set the high target price for NYSE GGC stocks at $35 per share.
Furthermore Georgia Gulf’ performance improved lately. Georgia Gulf Corporation reported that its annual Revenue rose from $1.99billion in ’09 to $2.81billion in 2010. Furthermore Georgia Gulf Corporation reported that its third quarter Revenue increased from $758.04million in 2010 to $929.64million in 2011 and its third quarter Net Income rose from $24.96million to $34.36million.

Then on January 16, 2012, Georgia Gulf Corporation (NYSE: GGC) announced that its Board of Directors has rejected Westlake Chemical Corporation’s unsolicited proposal to acquire Georgia Gulf for $30.00 per share.

However, the plaintiff claims that the directors adopted a Shareholder Rights Plan, the poison pill that allows them to deflect offers for the company, instead of maximize the value shareholders would receive.