Costa Inc. and Essilor International Merger May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Costa Inc. (NASDAQ: ATX) by Essilor International. Costa and Essilor announced the signing of a definitive merger agreement pursuant to which Essilor will acquire Costa. Under the terms of the agreement, holders of Costa will receive $21.50 in cash for each share owned.
Is the Merger Best for Costa and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Costa is undertaking a fair process to obtain maximum value and adequately compensate Costa shareholders in the merger. As an initial matter, the $21.50 consideration represents a premium of only 7.6% based on Costa’s closing price on November 7, 2013. This premium is substantially below the median one-day premium of 19.89% for comparable transactions in the last three years. Further, the merger consideration is below the target price of $29.00 set by an analyst at D.A. Davidson & Co. and the $27.00 price set by an analyst at Benchmark Company LLC. In addition, Costa is currently experiencing success and growth in its business prospects, as indicated in its October 30, 2013 press release announcing the company’s financial results for its third quarter 2013. In particular, Costa reported:
- Sales growth of 26.3% to $24.6 million, compared to $19.4 million for the same quarter 2012;
- Sales growth of 20.7% to $80.8 million, for the nine months ended September 28, 2013 and;
- Sunglass sales increase of 24.1% and accessories sales increase of 46.6%
Given these facts, Robbins Arroyo LLP is examining the Costa board of directors’ decision to sell the company to Essilor now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects, and whether they are seeking to benefit themselves.
Costa shareholders have the option to file a class action lawsuit to secure the best possible price for shareholders and the disclosure of material information so shareholders can tender their shares in an informed manner.
Costa 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.