Global Defense Technology And Systems, Inc. Investor Files Lawsuit Against Buyout

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Company Name(s): 
Global Defense Technology and Systems
Case Name: 
Global Defense Technology and Systems Deal Case 03/14/2011
Case Status: 
Lawsuit Filed
Affected Securities
NASDAQ: GTEC
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 
03/14/2011
Class Period End: 
03/02/2011
Summary: 

An investor in Global Defense Technology and Systems, Inc. filed a lawsuit in effort to stop the proposed takeover by Ares Management LLC and alleges breaches of fiduciary duties.

According to the complaint the plaintiff alleges that members of the board of directors of Global Defense Technology and Systems breached their fiduciary duties arising out of their attempt to sell Global Defense Technology and Systems Inc too cheaply via an unfair process to an affiliate of Ares Management LLC.

On Thursday, March 3, 2011, Global Defense Technology & Systems, Inc. (Nasdaq: GTEC) announced it has entered into an agreement to be acquired through a cash tender offer at $24.25 per share by an affiliate of Ares Management LLC in a transaction with a total value of approximately $315 million, including the assumption of debt and prior to expenses. Global Defense Technology and Systems said the offer represents a premium of approximately 51% over GTEC's closing stock price as of March 2, 2011 and approximately 56% over its 90-day average closing stock price.

Indeed shares of Global Defense Technology and Systems, Inc. (NASDAQ:GTEC) jumped in response to the going private news from roughly $16.40 per share to $24.16 per share.

But Global Defense Technology & Systems, Inc. also announced that Damian Perl, the founder and Chief Executive of Global Strategies Group, former sole beneficial owner of Global Defense Technology and Systems, Inc. and a current Global Defense Technology and Systems director, entered into a tender and voting agreement in support of the offer and Global Strategies Group is the largest beneficial shareholder in Global Defense Technology and Systems, owning approximately 42% of GTEC outstanding stock.
In addition Global Defense Technology and Systems performed well for its investors in the past years. Global Defense Technology and Systems’ 12 months Total Revenue went from $124.46million in 2006 to $232.67million in 2010. Its Net Income went from $4.06million in 2006 and a Net Loss of $4.89million in 2007 to a Net Income of $8.75million in 2010.