No sooner had Citadel Broadcasting announced that it had agreed to be acquired by Cumulus Media for $37 per share than at least three law firms specializing in shareholder lawsuits issued press releases trolling for clients. That seems to have become standard operating procedure these days on Wall Street.
Each of the class action law firms says it is investigating whether the directors of Citadel adequately shopped the company to obtain the best possible price for shareholders. One asks strangely “whether the board is taking advantage of Citadel Broadcasting’s recent emergence from bankruptcy and positive third quarter earnings for 2010 by striking a deal while the stock price is still depressed,” without explaining how that could benefit the directors of Citadel.
RBR-TVBR observation: Citadel’s shares post-Chapter 11 are overwhelming held by sophisticated funds which specialize in investing in deeply discounted debt instruments. Now that the pre-Chapter 11 debt has been converted into post-Chapter 11 stock they are champing at the bit to cash out. In fact, they had to put heavy pressure on the Citadel directors to make them put the company up for auction. They’re not likely to be interested in trying to tie up the sale in court.