ArcSight, Inc. Board Under Investor Investigation Over HP takeover

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Company Name(s): 
ArcSight
Affected Securities: 
NASDAQ: ARST

An investigation on behalf of investors of ArcSight Inc. (NASDAQ:ARST) over potential breaches of fiduciary duty by the ARST board of directors in connection with the proposed takeover of ArcSight Inc. by Hewlett-Packard Company was announced.

The investigation by a law firm concerns whether ArcSight Inc. and its Board breached their fiduciary duties owed to ARST investors in connection with the proposed takeover. ArcSight, Inc., located in Cupertino, California, is a provider of enterprise threat and risk management solutions that protect business and government enterprises. On Monday, Sept. 13,. 2010, HP and ArcSight, Inc. announced that they have signed anagreement for HP to acquire ArcSight for $43.50 per share, or an enterprise value of $1.5 billion. On August 27, 2010, the Wall Street Journal reported that ArcSight put itself up for sale and that the company “expects to fetch more than $40 a share.” ArcSights’ revenue increased almost 200% over the past four years. While ArcSight Inc. reported $69.83million in revenue for the past 12months on April 30, 2007, it was able to report $181.38million in revenue for the past 12 months on April 30, 2010. Its Net Income went from a Net Loss of $0.26million reported on April 30, 2007 to a Net Income of $28.39million reported on April 30, 2010.

Shares of ArcSight Inc. (Public, NASDAQ:ARST) traded before the announcement at $36 per share, but jumped to almost $44 per share in response to the takeover news and therefore above the current offer of $43.50 per share.

Thus the investigation by a law firm concerns whether the ArcSight Inc. Board of Directors breached their fiduciary duties to ArcSight Inc. (NASDAQ:ARST) stockholders by failing to undertake an adequate and fair sales process, adequately shop ArcSight Inc. before entering into the transaction, and whether the proposed transaction undervalues ArcSight Inc. (NASDAQ:ARST) shares and by how much this proposed transaction undervalues the Company to the detriment of ArcSight Inc. shareholders.