Robbins Arroyo LLP: Acquisition of Lumos Networks Corp. (LMOS) by EQT Infrastructure, Ltd. (Private) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Lumos Networks Corp. (NASDAQGS: LMOS) by EQT Infrastructure, Ltd (Private). On February 20, 2017, the two companies announced the signing of a definitive merger agreement pursuant to which EQT Infrastructure will acquire Lumos Networks. Under the terms of the agreement, Lumos Networks shareholders will receive $18.00 for each share of Lumos Networks common stock.
Is the Proposed Acquisition Best for Lumos Networks and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Lumos Networks is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $18.00 merger consideration represents a premium of only 16.2% based on Lumos Networks’ average closing price for the month prior to the announcement of the merger. This premium is significantly below the average one month premium of 40.39% for comparable transactions within the past three years. Further, the $18.00 merger consideration is significantly below the target prices of $18.50 set by an analyst at Cowen and Company on November 10, 2016, and $21.00 set by an analyst at BTIG LLC on February 5, 2017. In the last three years, Lumos Networks traded as high as $18.76 on February 24, 2014, and most recently traded above the merger consideration – at $18.20 – on March 6, 2015.
On November 9, 2016, Lumos Networks reported strong earnings results for its third quarter 2016. Total revenue was $51.8 million, an increase of nearly 2% from the same period of the prior year, while operating income was $9.2 million, up nearly 7% from the same period of the prior year. Additionally, the Lumos Networks beat analyst estimates for adjusted EPS and adjusted net income in three out of its last four quarters. In commenting on these results, Lumos Networks President and Chief Executive Officer Timothy G. Blitz remarked, “Lumos Networks executed well in three focus areas in the third quarter.… First, we demonstrated strong operational performance in the quarter with 10% data revenue growth and total Adjusted EBITDA growth of nearly 9%…. Secondly, we completed our network separation analysis. Not only did we ascertain the feasibility of the separation of our regulated assets, we began physical separation of the network during the third quarter.… Lastly, we entered into an agreement to acquire Clarity Communications, a fiber bandwidth provider with a 730 fiber route mile network throughout the Southeast.”
In light of these facts, Robbins Arroyo LLP is examining Lumos Networks’ 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.
Lumos Networks 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.
Lumos Networks 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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