NextWave Wireless Inc., the wireless technology provider, was sued by a shareholder who contends AT&T’s $600 million takeover offer undervalues the company’s shares.
The shareholder, Burt Weiss, said in a filing today in Delaware Chancery Court that directors have a duty to get the best price for the shares and instead agreed to sell the company at an initial $1 a share, with possible further contingent payments, without conducting an auction or other market-check.
The deal is also unfairly designed to “cure the massive debt owed by the company to several of its officers and directors,” including senior and subordinated note-payoffs, “lucrative severance payments” and vested stock options, according to the lawsuit, filed in Wilmington.
The companies said Aug. 2 that Dallas-based AT&T would buy San Diego-based NextWave to add more network capacity for services such as mobile Internet access.
Jeff Seedman, a spokesman for NextWave at Finn Partners in San Francisco, said the company had no comment on the suit.
The complaint alleges that common stockholders were originally slated to get $6 a share, later reduced to $1, and that if the deal is consummated, some NextWave executives may receive cash incentive awards of $1 million each or more.
NextWave rose 1 cent to $1.31 in over-the-counter trading at 1:51 p.m. in New York.
Weiss is asking a judge to block the transaction under its present terms and to award damages to investors.
The case is Weiss v. NextWave, CA7821, Delaware Chancery Court (Wilmington).