Smith International, Inc. Investor Files Lawsuit Over Alleged Breach of Fiduciary Duty

If you are currently a long term investor in shares of Smith International, Inc. (Public, NYSE:SII), who purchased their SII shares before February 19, 2010, you have certain options and should contact the Shareholders Foundation.

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Company Name(s): 
Smith International
Case Name: 
Smith International Acquisition 02/26/2010
Case Status: 
Lawsuit Filed
Affected Securities
NYSE: SII
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 
03/25/2010
Summary: 

investors in Smith International, Inc. (Public, NYSE:SII), who purchased their SII shares before February 19, 2010, alleging breaches of fiduciary duty with an alleged unfair takeover.

An investor in Smith International, Inc filed a lawsuit over breaches of fiduciary duty arising out of the attempt to sell Smith International, Inc. (NYSE:SII) to Schlumberger Ltd. On Sunday, February 21, 2010 Smith International, Inc. (NYSE: SII) and Schlumberger Ltd (NYSE: SLB) announced a definitive merger agreement in which the companies would combine in a stock-for-stock transaction under which Smith International, Inc shareholders (SII) will receive 0.6966 shares of Schlumberger Ldt (SLB) in exchange for each Smith International (SII) share or based upon the undisturbed closing stock prices for both companies on February 18, 2010, a value of $45.84 per Smith International (SII) share. According to Smith International the Boards of Directors have unanimously approved a definitive merger agreement and the offer represents a 37.5% premium.

But according to a previous investigation by a law firm “the transaction appears to be unfair” to current investors of Smith International, Inc. (Public, NYSE:SII) because the “offer to purchase Smith International, Inc. (Public, NYSE:SII) at a value of $45.84 per share appears opportunistically timed to take advantage of the current economic downturn” and is “grossly unfair, inadequate, and substantially below the fair or inherent value of SII”.

Shares of Smith International, Inc. (SII) traded at over $38 per share on Friday, February 19, 2010, and were down from $63.12 per share in September 2008, and over $82 per share in July, June, and May 2008. In additionSmith International, Inc. reported in 2007 Total Revenue of $8.76433billion with a Net Income of $647.05million, in 2008 Total Revenue of $10.77084billion with a Net Income of$767.28million, and in 2009 Total Revenue of $8.21856billion with a Net Income of $148.47million.

One investigation even called the deal “suspicious because it appears that the Company's Board of Directors may have failed to shop the Company to other potential buyers to assure that the Company's shareholders receive the best possible price for their shares.”