Boots & Coots, Inc. Shareholder Investigation Concerning Unfair Takeover
Shortly after the merger announcement an investigation on behalf of current investors of Boots & Coots, Inc. (AMEX:WEL), who purchased the WEL shares before April 09, 2010, over potential breaches of fiduciary duty and other violations of state law in connection with an alleged unfair takeover price and practice was announced.
The investigation by a law firm focus on potential breaches of fiduciary duty and other violations of state law by the Board of Directors of Boots & Coots arising out of their attempt to sell Boots & Coots, Inc. (AMEX:WEL) to Halliburton Company.
Boots & Coots Inc., formerly Boots & Coots International Well Control, Inc., provides a suite of integrated pressure control and related services to onshore and offshore oil and gas exploration and development companies principally in North America, Asia, North Africa, South America, West Africa and the Middle East.
On April 09, 2010, Halliburton Company (NYSE: HAL) and Boots & Coots, Inc. (NYSE Amex: WEL) announced that Halliburton has entered into a definitive merger agreement to acquire all of the outstanding stock of Boots & Coots in a stock and cash transaction. Under the merger agreement, Boots & Coots stockholders (WEL) will receive approximately $3.00 per WEL share they hold, comprised of $1.73 in cash and $1.27 in Halliburton (HAL) common stock.
The Boards of Directors of both Halliburton and Boots & Coots have approved the transaction.
Shares of Boots & Coots, Inc. (WEL) traded after the announcement at $2.94 per share, and at $2.40 per share the trading day before the news. WEL shares reached over $3 per share in 2007. At least one analyst set a price target for Boots & Coots, Inc stock (WEL) at $3.50 per share and the median target set by analysts is $3.20 per share.
According to an investigation by a law firm “the transaction appears to be unfair” to current investors of Boots & Coots, Inc. (AMEX:WEL) because the “offer to purchase Boots & Coots, Inc. (WEL) 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 WEL”.
Boots & Coots, Inc., located in Houston, Texas, reported in 2007 Total Revenue of $105.3million, in 2008 $209.24million, and in 2009 $195.07million.
The investigation in particular “concerns whether the Boots & Coots Board of Directors breach their fiduciary duties to Boots & Coots, Inc. (AMEX:WEL) shareholders if they agree to sell Boots & Coots, Inc. at an unfair price thereby harming Boots & Coots, Inc. and its shareholders”, “whether the directors of Boots & Coots, Inc. may breach their fiduciary duties by not acting in Boots & Coots shareholders' best interests”, and “the Company may not have adequately shopped itself around if they enter into this transaction and, pursuant to this proposed transaction, Halliburton Company may be underpaying for Boots & Coots, Inc. thus unlawfully harming WEL shareholders”.