A DirecTV investor sued to block AT&T’s $48 billion takeover, calling the offer “inadequate.” Under the terms of the deal announced this month, AT&T will pay $95 for each share of DirecTV, split between $28.50 in cash and the equivalent of $66.50 in stock.
“Given the fact that the company was poised for significant future growth and success, the value of DTV stock is being significantly undervalued in the proposed acquisition,” investor David Rivera said in a complaint filed in Delaware Chancery Court.
The purchase gives AT&T a national satellite-TV provider to combine with its wireless service and phone and high-speed Internet offerings. DirecTV, which doesn’t have its own phone service or a competitive Internet offering, was under rising pressure to find a partner as more viewers go online for video and the pool of traditional MVPD customers shrinks.
“Our transaction with AT&T will provide our shareholders with a 30% premium to DirecTV’s unaffected stock price and the opportunity to participate in the significant upside potential of this strategic combination,” DirecTV told Bloomberg.
Rivera asked a judge to stop the DirecTV acquisition under its present terms and to award damages and legal fees. In his complaint, he claims that DirecTV directors improperly agreed to an onerous breakup fee of $1.45 billion in order to block other potential suitors from making a higher bid.
He also said the board’s sales procedure was “fundamentally flawed,” said the Bloomberg story.
“Not only did the board fail to run a full and fair sales process on the front-end of the transaction, it ensured no competing bid would emerge on the back-end as well,” according to the complaint.