Adams Golf Inc. (ADGF), whose golf clubs are used by players including Tom Watson and Kenny Perry, was sued by an investor claiming a $70 million offer for the company by Adidas AG (ADS) is inadequate.
The proposed transaction represents a “paltry premium of just 9.5 percent” over Adams Golf’s closing price on March 18, the day before the announcement, and fails to adequately compensate shareholders for the “significant synergies” created by the merger, shareholder Daniel Tarsha said in the complaint.
Adams Golf directors “have exacerbated their breaches of fiduciary duty by agreeing to lock up the proposed transaction with deal protection devices that preclude other bidders,” Tarsha said in the complaint made public today in Delaware Chancery Court (1400L).
Adidas, the owner of the TaylorMade brand, said it would pay $10.80 a share in cash for Plano, Texas-based Adams. The deal, which will be financed through cash or existing credit lines, is expected to close mid-2012, Adidas said.
The deal includes provisions that prevent Adams Golf from soliciting other bidders, gives Adidas four days to match any competing offer and requires the company to pay Adidas a termination fee of approximately 4 percent of the total offer, Tarsha said in his complaint.
Tarsha is seeking to represent all Adams Golf shareholders in his request for a court order barring the deal. Adams Golf officials weren’t immediately available to comment.
The case is Tarsha v. B.H. Adams, CA7362, Delaware Chancery Court (Wilmington).
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