Sybase, Inc. Investors Filed Lawsuit Against SAP Bid

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Company Name(s): 
Sybase
Case Name: 
Sybase Deal Case 05/20/2010
Case Status: 
Lawsuit Filed
Affected Securities
NYSE: SY
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 
05/20/2010
Class Period End: 
05/20/2010
Court of Filing: 
California State Court
Summary: 

An investor in Sybase filed a lawsuit in California Court on behalf of current investors in Sybase, Inc. (NYSE:SY) to block SAP AG’s proposed $5.8billion takeover alleging breaches of fiduciary duty by the board of directors of Sybase for selling Sybase too cheap to SAP AG.

Last Wednesday Sybase, Inc. (NYSE: SY) and SAP AG (NYSE: SAP) announced that SAP’s subsidiary, SAP America, Inc., has signed a merger agreement to acquire Sybase, Inc., under which SAP America, Inc., will make an all cash tender offer for all of the outstanding shares of Sybase common stock at $65.00 per share, representing an enterprise value of approximately $5.8 billion. According to Sybase, Inc its board of directors has unanimously approved the transaction and the offer represents a 44% premium over the three-month average stock price of Sybase. But according to the complaint the plaintiff alleges that Sybase shareholders are being harmed by the takeover because the offer of $65 per share is "unfair and grossly inadequate" because the value of Sybase’s common “is materially in excess of the amount offered for those securities in the proposed acquisition given the company’s prospects for future growth and earnings,”

The plaintiff says the terms are unfair to investors because they deter also discourage other potential bidders, calling out speculation that Hewlett-Packard Co. (HPQ) might offer as much as 10% more for Sybase.

Shares of Sybase, Inc. (SY) traded on Wednesday, May 12, 2010, before the news at about $42 per share and climbed after the announcement of the takeover to $64.50 in after hours trading, and traded recently at $64.04 per share.