Robbins Arroyo LLP: Acquisition of Acacia Research Corporation (ACTG) by Uniloc Luxembourg S.A. May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Acacia Research Corporation (NASDAQ: ACTG) by Uniloc Luxembourg S.A. On March 14, 2016, the two companies announced a proposal pursuant to which Uniloc will acquire Acacia. Under the terms of the proposal, Acacia shareholders will receive $3.72 in cash for each share of Acacia common stock.
Is the Proposed Acquisition Best for Acacia and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Acacia is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $3.72 merger consideration represents a premium of only 5.4% based on Acacia’s closing price on March 11, 2016. This premium is significantly below the average one day premium of 36% for comparable transactions within the past five years. Further, the $3.72 merger consideration is significantly below the target price of $6.50 set by an analyst at Lake Street Capital Markets LLC on December 23, 2015; $5.20 set by an analyst at Northland Securities Inc. on February 26, 2016; and $4.00 set by an analyst at Barclays on January 5, 2016. In the last three years, Acacia Research Corp. traded as high as $31.29 on March 21, 2013, and most recently traded above the merger consideration – at $4.18 – on January 6, 2016.
On February 25, 2016, Acacia reported earnings results for its fourth quarter 2015. Revenues were $37.5 million, as compared to $31 million in the comparable prior year quarter, a 20.8% increase. During 2015, Acacia acquired control of three new patent portfolios. In commenting on these results, Acacia Interim Chief Executive Officer Marvin Key remarked, “We received approval from our Board of Directors to terminate the annual cash dividend of $0.50 per common share, payable in the amount of $0.125 per share per quarter, which is effective February 23, 2016. The Board believes this decision is advisable as the company continues to invest its cash resources in the development of new licensing and enforcement programs that will improve the company’s operating results and financial condition and enhance stockholder value. The elimination of the quarterly cash dividend will save approximately $25.4 million annually and enhance the company’s liquidity position.”
In light of these facts, Robbins Arroyo LLP is examining Acacia’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s future growth prospects.
Acacia 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.
Acacia 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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