Acquisition of Nicholas Financial, Inc. by Prospect Capital Corporation May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP are investigating the acquisition of Nicholas Financial (NASDAQ: NICK) by Prospect Capital Corporation (NASDAQ: PSEC). On December 18, 2013, the two companies announced the signing of a definitive merger agreement pursuant to which Prospect Capital will acquire all outstanding shares of Nicholas Financial for $16.00 per share.
Is the Proposed Merger Best for Nicholas Financial and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Nicholas Financial is undertaking a fair process to obtain maximum value and adequately compensate Nicholas Financial shareholders in the merger.
As an initial matter, the $16.00 consideration represents a one day premium of only 4.7% based on Nicholas Financial’s closing price on December 17, 2013. This one day premium is substantially below the average one day premium of nearly 30% for comparable transactions in the last five years. In addition, Nicholas Financial shares traded at the consideration price on December 4, 2013, and traded as high as $17.20 as recently as October 25, 2013.
Given these facts, Robbins Arroyo LLP is examining whether the Nicholas Financial board of directors are seeking to benefit themselves with their decision to sell the company to Prospect Capital now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Nicholas Financial shareholders have the option to file a class action lawsuit to ensure the board of directors properly evaluates the proposal to obtain the best possible price for shareholders and the disclosure of material information.
Nicholas Financial shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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