3M Bid for Cogent Too Low, Three Large Investors Say

Three of the 10 biggest Cogent Inc. investors said a 3M Co. bid for the fingerprint-identification systems maker, supported by its chief executive officer and largest shareholder, is too low.

Iridian Asset Management LLC, the fourth-largest investor as of June 30, and Corbyn Investment Management Inc., the eighth-largest, said today that Cogent is worth more than 3M’s $10.50-a-share bid. The comments came a day after Pointer Capital, which with affiliate Atlantic Investment Co. holds the third-largest stake, made a similar criticism.

3M agreed on Aug. 30 to buy Pasadena, California-based Cogent for an 18 percent premium to the share price on Aug. 27, the last day of trading before the announcement. That’s lower than the 29 percent average premium offered to U.S. identification-systems companies in more than 20 acquisitions announced during the past five years, Bloomberg data show.

Iridian today called the offer “inadequate,” and Corbyn said it is “disappointed” with the proposed sale.

“The fundamental value of Cogent is somewhere north of $12.50,” said Michael Goodman, a senior investment analyst for Corbyn, which had about a 2 percent stake as of June 30. A bid of $12.50 would be a premium of 40 percent to the Aug. 27 price.

Iridian doesn’t intend to tender its shares at the proposed price, managing directors Jeffrey Silver and W. Ben Hunt said in a statement. Iridian had 2.39 million shares as of June 30, according to data compiled by Bloomberg, and now owns more than 2.4 million shares.

$15 Per Share

Pointer said the fundamental value of Cogent is at least $15 a share, according to a letter signed by partners Brent D. Cann and Malon W. Courts. That would be a 68 percent premium to the Cogent’s Aug. 27 share price.

A 3M spokeswoman, Jacqueline Berry, declined to comment.

3M gained $2.46, or 3.1 percent, to $81.01 at 4:15 p.m. in New York Stock Exchange composite trading. Cogent gained 23 cents, or 2.1 percent, to $11.23 in Nasdaq Stock Market trading.

Cogent shares have closed at $11 or more each day since St. Paul, Minnesota-based 3M announced the takeover agreement.

Cogent Chief Executive Officer Ming Hsieh, who owned a 38 percent stake as of May, has agreed to tender his shares in the offer, 3M said in a statement on Aug. 30, as have “certain entities affiliated with him.”

Cogent’s CEO wasn’t available for an interview today, said Chris Danne with media relations firm Blueshirt Group.

‘Consider Other Shareholders’

The size of Ming Hsieh’s stake doesn’t guarantee Cogent’s deal with 3M will close, said Elizabeth Nowicki, a law professor at Tulane University School of Law.

“Courts have been willing to force even an independent majority shareholder, much less a CEO or officer shareholder, to consider the other non-controlling shareholders when deciding whether to lock up a bid,” she said in a telephone interview.

Cogent would have to pay a breakup fee of $28 million to withdraw from the deal, according to a regulatory filing yesterday.

The “pretty high” fee “may also discourage other bidders,” Josephine Millward, an analyst with Benchmark Co., said today in an e-mail.

To contact the reporter on this story: Will Daley in New York at wdaley2@bloomberg.net

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