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Investors lodge Bell lawsuit in US over Avnet acquisition

Microscope contributor
A small group of disgruntled investors have lodged lawsuits in the US against Bell Microproducts' board of directors for alleged breaches of shareholder duty by selling to Avnet too cheaply and in an unfair manner. 

According to support group Shareholders Foundation, which unites individual and institutional investors with common concerns, at least three investors have lodged papers with the California State Court against Bell's leaders.  

The allegation is that certain "officers and directors of Bell have decided to pursue their own interests" instead of "maximising shareholder value". 

At the end of last month, Avnet made an offer of $7 per share for Bell which valued the enterprise distributor at $594m, representing a premium of 30% over the closing market price on 26 March. 

Days after the deal was made public, US firm Kendall Law Group wasted no time in announcing its intention to investigate whether shareholders had got the best return on their investment. 

It was latterly joined by another firm Finkelstein Thompson LLP which also wanted to ask questions about the price and process of the proposed transaction. 

The lawsuit in California alleges that the deal was "unfair and inadequate" and "harmful to Bell's public stockholders" as its board agreed to not seek any higher offers from anyone else.  

"The company agreed that it will not solicit, initiate, or knowingly encourage any superior proposals from other parties and it would pay a termination fee of $10.5m if it accepted a superior proposal," the lawsuit stated. 

Bell has been through more than its share of traumas over the last two years and came through the recession, got re-listed on the Nasdaq and turned around its results, posting a 9% rise in sales during Q4 and profits of $12.9m. 

Bell refused to comment.

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