Winn-Dixie Stores, Inc. Investor Files Lawsuit To Block The Takeover By BI-LO, LLC
San Diego, Dec. 23, 2011 (Shareholders Foundation) -- An investor in NASDAQ: WINN shares filed a lawsuit in State Court against directors of Winn Dixies Stores Inc in effort to block to proposed sale of the food retailer to BI-LO, LLC for $9.50 per WINN share.
According to the complaint the plaintiff alleges that members of the board of directors of Winn Dixie breached their fiduciary duties arising out of their attempt to sell the grocery chain at an unfair price via an unfair process.
On Monday, December 19, 2011, BI-LO, LLC and Winn-Dixie Stores, Inc. (NASDAQ: WINN) announced that BI-LO will acquire all of the outstanding shares of Winn-Dixie Stores, Inc stock (NASDAQ: WINN). Under the terms of proposed transaction, Winn-Dixie Stores shareholders will receive $9.50 in cash per share of Winn-Dixie common stock.Winn-Dixie Stores, Inc said the offer represents a premium of approximately 75% over the closing price of Winn-Dixie common stock on December 16, 2011.
However, the plaintiff claims that given the challenging economic environment, the price of Winn-Dixie common stock has been trading at a huge discount to its intrinsic value and as a result, Bi-Lo LLC is seeking to acquire Winn-Dixie Stores Inc at the most opportune time, and that at a price that significantly undervalues Winn-Dixie Stores. In fact, shares of Winn-Dixie Stores, Inc. (WINN) traded as recently as July 20, 2011 as high as $9.81, thus above the current offer and at least one analyst has set the high target price at $11.00 per share, also above the current offer.
Furthermore, so the plaintiff, directors agreed to deal protections devices, such as a$19.6 million termination fee provision, that preclude other bidders from making a competing offer.