Smurfit-Stone Container Corporation Investor Investigation Questions Buyout Offer

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Company Name(s): 
Smurfit-Stone Container
Affected Securities: 

After Smurfit-Stone Container Corp announced that its board of directors agreed to a takeover of Smurfit-Stone Container by competitor RockTenn an investigation for investors in Smurfit-Stone Container Corporation (NYSE:SSCC) questioning whether the offer and the sale process are unfair to SSCC investors was announced.

The investigation by a law firm concerns whether certain officers and directors at Smurfit-Stone Container Corp breached or will breach their fiduciary duty owed to the shareholders of Smurfit-Stone Container Corporation (NYSE:SSCC) arising out of their attempt to sell Smurfit-Stone Container to RockTenn.

Seven months after Chicago based Smurfit Stone Container emerged from bankruptcy RockTenn (NYSE:RKT) and Smurfit-Stone Container Corporation (NYSE:SSCC) announced that their Boards of Directors have approved an agreement under which Smurfit-Stone Container Corp will become a wholly owned subsidiary of RockTenn. Under the terms of the proposed agreement the aggregate consideration, consisting of 50% cash and 50% RockTenn stock, is valued at $35 per-share of Smurfit-Stone Container Corporation common stock or an aggregate equity value of the transaction, based on the closing price of RockTenn's common stock on January 21, 2011, of approximately $3.5 billion. Smurfit-Stone Container Corp said that the offer represents a 27% premium to Smurfit-Stone Container Corp's closing stock price on January 21, 2011.
Smurfit-Stone Container Corp’s 12 months Total Revenue went from $7.157billion in 2006 to $5.574billion in 2009. For the first three quarters in 2010 Smurfit-Stone Container Corp reported a combined 9months Total Revenue of $4.658billion. Smurfit-Stone Container shares (SSCC) traded recently at $27.52 per share.

The investigation seeks to determine whether Smurfit-Stone Container Corporation and certain of its officers and directors breached their fiduciary duties owed to Smurfit-Stone Container Corporation (NYSE:SSCC) investors by rushing into the transaction and failing to undertake an adequate and fair sales process to obtain fair consideration for all shareholders of Smurfit-Stone Container Corp (SSCC), specifically by entering into any transaction before adequately shop the Company. A potential class action lawsuit would seek to maximize the amount of money and information SSCC shareholders would receive in a buyout, so the law firm.