The investor, Navin Shah, said in a lawsuit filed today in Delaware Chancery Court in Wilmington that Atlanta-based Ebix’s directors negotiated too low a bid, agreed to a potential breakup fee of as much as $27 million, and want to dissuade other buyers and get the deal through so they will keep their jobs.
The directors “are continuing to violate” their duties “due to the fact that they have engaged in all or part of the unlawful acts, plans, schemes, or transactions” in the complaint, Shah said. He asked a judge to stop the takeover under its present terms or award damages and legal fees, according to court papers.
Steve Barlow, an Ebix spokesman, didn’t immediately return an e-mailed message seeking comment on the lawsuit.
The all-cash deal amounts to about $20 a share, according to Ebix. A “go-shop” provision allows Ebix to solicit competing bids in the 45 days after the deal was announced. The shares fell 2 cents to $19.50 at 4 p.m. in Nasdaq trading.
Ebix’s accounting practices are under scrutiny by the U.S. Securities and Exchange Commission, according to people with direct knowledge of the matter. Ebix officials have said there’s no investigation as far as they know.
The case is Shah v. Ebix, CA8526, Delaware Chancery Court (Wilmington).
To contact the reporter on this story: Phil Milford at email@example.com.
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org