3M, the maker of products including anti-counterfeiting laminates, agreed Aug. 30 to buy Pasadena, California-based Cogent for $10.50 a share for a total of $943 million. Cogent investors sued in Delaware Chancery Court alleging the company’s officials didn’t get enough for shareholders and unfairly structured the deal to deter other bidders.
NEC, Japan’s largest maker of personal computers, bid as much as $12 a share before Cogent’s board agreed to St. Paul, Minnesota-based 3M’s offer, Cogent shareholders said in a court filing unsealed yesterday. Cogent officials had said they’d received a bid from an unidentified bidder identified only as “Company D.”
“From talking to industry sources and analysts and investors, I think the consensus was that it was NEC but nobody had that confirmed,” said Brent D. Cann, a partner at Pointer Capital, which with affiliate Atlantic Investment Co. holds the third largest Cogent stake. “Nothing surprises me at this point coming out on this story. Everything you hear about this is just shady.”
Cogent climbed as much as 2.8 percent to $10.94 after regular trading on the Nasdaq Stock Market yesterday, before settling back down to $10.64 at 5:35 p.m. 3M fell 46 cents to $86.71 at 4 p.m. yesterday in New York Stock Exchange composite trading.
“Plaintiffs have identified NEC” as Company D, investors said in the court filing. They said NEC’s offer was “subject only to a short period to complete its due diligence.”
A representative of Tokyo-based NEC couldn’t immediately be reached for comment yesterday.
Cogent makes fingerprint and palm-print identification systems that allow customers to electronically capture print images, encode prints into files and compare them to a database containing potentially millions of prints.
Cogent investors are scheduled to ask Chancery Court Judge Donald Parsons today to block 3M’s bid at a hearing in Wilmington, Delaware. The court filing was unsealed at the request of Bloomberg News.
Cogent executives “pushed through the deal with 3M to obtain significant financial benefits for themselves that will not be shared with the public shareholders of Cogent,” the lawyers said in the filings.
3M said in a Sept. 10 statement that it had commenced a tender offer for Cogent and that the offer expires at midnight on Oct. 7.
The case is In Re Cogent Inc. Shareholders Litigation, Consolidated CA 5780-VCP, Delaware Chancery Court (Wilmington).
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