Acquisition of ChyronHego Corporation (CHYR) by Vector Capital May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of ChyronHego Corporation (NASDAQ: CHYR) by Vector Capital (private). On November 17, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which Vector Capital will acquire ChyronHego. Under the terms of the agreement, ChyronHego shareholders will receive $2.82 for each share of ChyronHego common stock.
Is the Proposed Acquisition Best for ChyronHego and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at ChyronHego is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $2.82 merger consideration represents a premium of only 4.1% based on ChyronHego’s closing price on November 14, 2014. This premium is significantly below the average one-day premium of nearly 44.5% for comparable transactions within the past five years. Further, the $2.82 merger consideration is significantly below the target price of $4.00 set by analysts at Dougherty & Company LLC and Noble Financial Group on April 16, 2014, and January 16, 2014, respectively.
In addition, ChyronHego shares have traded above the merger consideration as recently as November 10, 2014, when it reached a high of $2.93. As recently as September 17, 2014, ChyronHego shares traded as high as $4.30 and closed at $3.70 per share on that same day.
On November 10, 2014, ChyronHego released its earnings results for its third quarter 2014, reporting strong quarterly earnings. Specifically, the company reported net income of $1.2 million and revenue of $16 million for the quarter, up 50% and 15%, respectively, compared to third quarter 2013. In commenting on these results, ChyronHego President and Chief Executive Officer Johan Apel remarked, “We are pleased with our strong third quarter performance. This is the first quarter where we can make year-over-year comparisons on the quarterly results since the Chyron and Hego merger, and we are encouraged by growth in revenues of 15%…. Our operating results are improving with a large part of the revenue growth falling to the bottom line. With continued improvement, we expect operating results to increase in the coming quarters.”
In light of these facts, Robbins Arroyo LLP is examining ChyronHego’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
ChyronHego shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
ChyronHego 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.