MSC Software Corp. Investor Lawsuit alleges unfair takeover

Symphony Technology Group announced last on Tuesday the proposed acquisition of MSC Software Corp. On Thursday an investor in MSC has filed a proposed securities class action lawsuit in the Superior Court of California on behalf of current investors of MSC Software Corp. (Public, NASDAQ:MSCS), who purchased their shares before July 07, 2009 challenging the proposed acquisition of MSC Software by Symphony Technology Group and Elliott Management Corp under the present conditions.

According to the complaint the plaintiff alleges that the board of directors of MSC failed to maximize shareholder value in connection with the proposal and therefore failed the fulfilled their fiduciary duties in connection with their attempt to sell MSC Software to Symphony Technology Group. On July 07, 2009 MSC.Software (Nasdaq: MSCS) announced that it has entered into a definitive agreement with affiliates of Symphony Technology Group under which a company controlled by Symphony Technology will acquire all of MSC Software's outstanding shares in a one-step cash merger transaction valued at approximately $360 million.

Under the terms of the agreement, MSC Software's stockholders (NASDAQ:MSCS) will receive $7.63 in cash for each share of MSC common stock NASDAQ:MSCS. MSC Software announced that this price per share represents approximately a 13% premium to the closing price per share of MSC's stock (NASDAQ:MSCS) prior to this announcement and approximately a 24% premium compared to the 90 trading-day trailing closing average price per share. But according to the investigation by one law firm the “deal appears to be unfair, given the fact that in June 1, 2009, MSC Software shares (NASDAQ:MSCS ) were trading at the exact price now offered, throughout 2008, MSC Software (NASDAQ:MSCS) traded at significantly above the offer price and as recently as October 2008, was trading above $10.25 a share, substantially higher than the current offer. Another investigation “concerns whether the MSC.Software Board of Directors breached their fiduciary duties to MSC.Software shareholders given that (i) the Company's shares traded at $7.73 as recently as June 1, 2009 and over $10.70 per share in the fourth quarter of 2008; (ii) the Company has $149 million in cash (or $3.27 per share) with no debt and a book value in excess of $7.00 per share; and (iii) analysts set a median price target for MSC.Software stock at $8.75 per share with a high target of $10.00 per share.”

One investigation goes calls the deal even “suspicious because it appears from a review of the Company's financial statements that the inherent value of the Company's stock is greater than $7.63 and because the stock traded as high as $10.70 as recently as late last year. The deal is also suspicious because Symphony Technology Group already owns 13% of the shares of MSCS, meaning that Symphony Technology Group can likely control the vote of the MSCS shareholders to sell MSCS to Symphony Technology Group.”

MSC.Software Corporation, located in Santa Ana, California, develops, markets, and supports simulation software and related services. Engineers use MSC’s simulation software to construct computer models of products, components, systems and assemblies and to simulate performance conditions, and to predict physical responses to certain variables, such as stress, motion, and temperature. Shares of MSC Software Corp. (Public, NASDAQ:MSCS) traded on July 07, 2009 after the announcement at $7.49 per share, down from a 52weekHigh of $13.89 per share and almost $16 per share in 2007. MSC Software Corp. reported Total Revenue of $246.65million in 2007 and Total Revenue of $254.39million in 2008.