Midas, Inc. (NYSE:MDS) Investor Files Lawsuit Against Director Over Alleged Breaches Of Fiduciary Duties In Takeover

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Company Name(s): 
Midas
Case Name: 
Midas Deal Case 03/27/2012
Case Status: 
Lawsuit Filed
Affected Securities
NYSE: MDS
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 
03/27/2012
Summary: 

San Diego, March 28, 2012 (Shareholders Foundation) -- An investor in NYSE:MDS shares filed a lawsuit against Directors of Midas, Inc. in effort to block the proposed takeover of Midas, Inc. by TBC Corporation for $11.50 per NYSE:MDS share.

According to the complaint the plaintiff alleges that the defendants breached their fiduciary duties owed to NYSE:MDS stockholders arising out of the attempt to sell Midas, INc. at an unfair price via an unfair process.

On March 13, 2012, TBC Corporation and Midas, Inc. (NYSE: MDS) had announced that they have entered into a merger agreement, pursuant to which TBC Corp. will acquire Midas, Inc. through a cash tender offer at $11.50 per share.

However, the plaintiff alleges that the $11.50offer undervalues Midas Inc. Furthermore, the plaintiff claims that company's financial advisor, J.P. Morgan Securities, did not provide "disinterested" advice. In August 2011, Midas Inc. issued a press release announcing that it would conduct a strategic review process in order to consider a potential sale, merger, or other business combination. Later Midas Inc. hired J.P. Morgan Securities to assist it with this review and the plaintiff alleges that J.P. Morgan Securities allegedly did not provide disinterested advice because it will profit by the proposed merger. In fact, one of J.P. Morgan Securities' clients is Sumitomo Mitsui Financial Group, which is affiliated with TBC Corporation. The plaintiff claims that J.P. Morgan has received, and expects to continue to receive, compensation for providing both investment banking and non-investment banking, securities-related services to Sumitomo Mitsui Financial Group and as a result of this conflict, J.P. Morgan was unable to provide independent, disinterested financial advice to Midas, Inc.