Palm Scratches Off First of HP Merger Suits
Palm has cleared from its decks at least one of the lawsuits filed by shareholders over its pending merger with Hewlett-Packard (HPQ). In a filing with the Securities and Exchange Commission Wednesday, the company said it reached a settlement with investor Steve Ubaney, who sued it in early May alleging breach of fiduciary duty.
“The proposed transaction is the product of a flawed sales process and is being consummated at an unfair price,” Ubaney said in his complaint, arguing that the deal–which will pay common shareholders $5.70 per share–did not maximize Palm’s value as well as it should have. An understandable point given that preferred shareholder Elevation Partners stands to recoup $8.50 a share on its initial $325 million investment, thanks to the liquidation preference it was able to negotiate.
Now Palm (PALM) has persuaded Ubaney to drop his claim, although just how isn’t clear. Terms of the settlement weren’t disclosed, and in its SEC filing, Palm says they “will not affect the amount of the merger consideration that Palm stockholders are entitled to receive in the merger.”
So one shareholder suit down. But still a few more to go. Says Palm: “A number of substantively similar putative stockholder class action suits also remain pending in the Superior Court of California in Santa Clara County.”