The Shaw Group Inc. (NYSE:SHAW) Investor Files Lawsuit Against Directors Over Alleged Breaches Of Fiduciary Duties In Takeover

Aug. 10, 2012 (Shareholders Foundation) -- An investor in shares of The Shaw Group Inc. (NYSE:SHAW) filed a lawsuit against directors of the Shaw Group Inc. in effort to stop the proposed takeover of the Shaw Group Inc by CB&I for $46.00 per NYSE:SHAW share.

The plaintiff alleges that the defendants breached their fiduciary duties owed to NYSE:SHAW stockholders by agreeing to sell the company too cheaply via an unfair process to CB&I.

On July 30, 2012, The Shaw Group Inc. (NYSE:SHAW) announced it has signed a merger agreement with CB&I (NYSE: CBI) under which CB&I will acquire Shaw in a cash and stock transaction valued at approximately $3 billion. Under the terms of the proposed transaction, CB&I will acquire the Shaw Group Inc for $46.00 per share in cash and stock. The Shaw Group’s shareholders will receive $41.00 in cash and $5.00 in CB&I equity (0.12883 shares based on an agreed upon recent average stock price of $38.81 per share) for each share of Shaw stock at closing.

However, the plaintiff says that the proposed transaction is the product of a flawed process that resulted in the board’s failure to maximize shareholder value in violation of their fiduciary duties, which will deprive Share’s public shareholders of the ability to participate in the company’s long term prospects.

Furthermore, so the plaintiff, certain defendants agreed to certain onerous and preclusive deal protection devices, such as a no solicitation, a matching rights, and a $104 million termination fee provision, which, to the detriment of Shaw’ shareholders, operate conjunctively to make the proposed transaction a fait accompli and ensure that no competing offers will emerge for the company.