True Religion, Jeans Maker, Sued Over TowerBrook BuyoutPhil Milford and Dawn McCarty
True Religion Apparel Inc., the maker of designer jeans worn by Megan Fox and Angelina Jolie, was sued by an investor who contended the shares are undervalued in an $835 million buyout by TowerBrook Capital Partners.
The company’s directors are duty-bound to obtain the highest possible price for the stock and violated that duty by agreeing to sell too low, the investor, Maxine Phillips, said in a Delaware Chancery Court complaint filed yesterday in Wilmington.
“The $32 per share consideration being offered” is “unfair and inadequate in light of the fact that True Religion has tremendous future growth prospects,” she said in the filing.
True Religion, based in Vernon, California, announced the deal May 10 and said the bid by TowerBrook, a New York-based private-equity firm, represented a 52 percent premium over the share price on Oct. 9, just before the company said it was exploring “strategic alternatives.”
Phillips asked the court to stop the deal under its present terms and to award damages and legal fees.
“The company declines to comment on ongoing litigation,” Alyssa Cass, a spokeswoman for True Religion, said in an interview.
The agreement “provides our shareholders with immediate and substantial cash value representing a significant premium,” Seth Johnson, lead director of True Religion, said in a May 10 statement announcing the deal.
The case is Phillips v. Maron, 8598, Delaware Chancery Court (Wilmington).