T-3 Energy Services, Inc. Board Under Investor Investigation Over Fairness of Buyout

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Company Name(s): 
T-3 Energy Services
Affected Securities: 
NASDAQ: TTES

In response to the buyout offer by Robbins & Myers to take over T-3 Energy Services, Inc. at a value of $31.80 several investigations on behalf of investors of T-3 Energy Services, Inc. (NASDAQ:TTES) over possible breaches of fiduciary duties was announced.

The investigations by several law firm concern whether Robbins & Myers, T-3 Energy Services, Inc. and its Board breached their fiduciary duties owed to T-3 Energy Services, Inc. (NASDAQ:TTES) investors in connection with the proposed takeover.

On Wednesday, October 6, 2010, Houston, Texas based T-3 Energy Services, Inc (Nasdaq: TTES) and Robbins & Myers, Inc. (NYSE: RBN) announced that their respective boards of directors have unanimously approved an agreement for Robbins & Myers to acquire T-3 Energy Services in a transaction valued at approximately $422 million, net of cash assumed. Under the terms of the agreement, for each share of T-3 common stock, T-3 Energy Services stockholders will receive 0.894 common shares of Robbins & Myers (RBN) plus $7.95 in cash. Based on yesterday's closing prices, this represents a value of $31.80 per share of T-3 common stock. T-3 Energy Services, Inc. (Nasdaq: TTES) and Robbins & Myers, Inc said this offer represents a premium of approximately 17% to T-3 Energy Service's closing share price as of October 5, 2010.

But the investigation by the law firms concern whether the sale process and the offered price are unfair to the shareholders of T-3 Energy Services, Inc. (NASDAQ:TTES).

Shares of T-3 Energy Services, which traded at $27.61 per share before the announcement, jumped in response to the news to $32.05 per share on Wednesday. TTES lost slightly in value on Thursday and closed at $31.37 per share. But TTES shares, which traded in 2008 at almost $75 per share, traded as early as June 16, 2010 at $32.89 per share, leaving practically no premium to TTES investors and rather granting Robbins & Myers a discount over its recent share price. In addition at least one analyst set a price target for T-3 Energy stock at $37.00 per share and was trading at $30.38 a share on May 3, 2010. T-3 Energy Services 12 month revenue went from $163.15million in 2006 to $218.46million in 2009. Furthermore, the Company reported a strong second quarter 2010 and earnings per share of $0.25, beating consensus estimates of $0.23. Therefore the investigation concerns whether the T-3 Energy Services Board of Directors undertook an adequate and fair sales process to obtain fair consideration for all shareholders of T-3 Energy Services, Inc. (NASDAQ:TTES) and breached their fiduciary duties to T-3 Energy Services, Inc. (NASDAQ:TTES) shareholder by failing to adequately shop the Company before entering into the transaction with Robbins & Myers.