McAfee, Inc. Shareholder Investigations Concerning Breaches of Fiduciary Duty by the MFE Board
Only hours after Intel hit the market with its move into the internet security sector several investigations on behalf of current investors of McAfee, Inc. (NYSE:MFE) concerning potential breaches of fiduciary duty by the MFE board of directors were announced.
On Thursday, August 19, 2010, McAfee, Inc and Intel Corporation announced that they have entered into a agreement to acquire Santa Clara, California based McAfee, Inc., through the purchase of all of its common stock at $48 per share in cash, for approximately $7.68 billion. According to McAfee, Inc. its board of directors has approved the deal. McAfee’s revenue almost doubled from 2006 to 2009. In 2006 McAfee reported Total Revenue of $1.14516billion, in 2007 $1.30822billlion, in 2008 $1.6billion, and in 2009 $1.92733billion. Its Net Income went from $137.47million in 2006 to $173.42million in 2009.
Shares of McAfee, Inc. (Public, NYSE:MFE) increased by about 60% from $30 per share on Wednesday August 18, 2010, to $47.25 per share after the announcement. Considering a closing price of $29.93 per share on the day before the announcement and an offer of $48 per share, McAfee investors would receive a premium of 60%, but MFE, which traded in October 2009 at over $45 per share shares, were down from over $41 per share in April 2010, after McAfee, Inc. announced its first quarter results and its second quarter guidance. Considering a stock price between $41 in April and $45 in October of $43 per share an offer of $48 per share, represents a more realistic premium of 10%.
At least one analyst has set a price target of $50.00 per share for McAfee, Inc. (NYSE:MFE). With a McAfee, Inc share price of $50 per share Intel Corp would receive McAfee at a substantial discount. Additionally the deal has been locked up by a no-solicitation provision and a $230 million termination fee.
The investigation by a law firm “concerns whether Intel Corp., as well as the directors of McAfee, Inc. breached their fiduciary duties by not acting in McAfee, Inc. (NYSE:MFE) shareholders' best interests in connection with the sale process of McAfee, Inc. , whether the McAfee Board of Directors breached their fiduciary duty to McAfee (NYSE:MFE) stockholders by failing to adequately shop the Company prior to entering into the agreement, whether the Board of Directors breach their fiduciary duties by not seeking a deal that will provide better value for McAfee, Inc. ”