MCG Capital Corporation
Robbins Arroyo LLP: Acquisition of MCG Capital Corporation (MCGC) by PennantPark Floating Rate Capital Ltd. (PFLT) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of MCG Capital Corporation (NASDAQ: MCGC) by PennantPark Floating Rate Capital Ltd. (NASDAQ: PFLT). On April 29, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which PennantPark will acquire MCG Capital. Under the terms of the agreement, MCG Capital shareholders will receive the equivalent of $4.75 in a combination of PFLT shares and cash for each share of MCG Capital common stock.
Is the Proposed Acquisition Best for MCG Capital and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at MCG Capital is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $4.75 merger consideration represents a premium of only 18.2% based on MCG Capital’s closing price on March 30, 2015. This premium is significantly below the average one-month premium of nearly 44.5% for comparable transactions within the past five years. In the last three years, MCG Capital has traded as high as $5.55 on August 1, 2013. Most recently, MCG Capital traded above the offer price on January 22, 2014, trading as high as $4.76.
On March 2, 2015, MCG Capital reported strong earnings for its fourth quarter 2014. Notably, net income for the fourth quarter of 2014 was $2.07 million, up 61.5% from the third quarter of 2014.
In light of these facts, Robbins Arroyo LLP is examining MCG Capital’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.
MCG Capital 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.
MCG Capital 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.