(CN) - A shareholder of cloud-based business execution software provider SuccessFactors Inc. says a $3.4 billion purchase offer from SAP America Inc. is inadequate.
     The merger agreement was announced Dec. 3, 2011. SucessFactors will be acquired by business management software and solutions provider SAP under its subsidiary SAP America Inc., and Saturn Expansion Corporation, a second subsidiary created to facilitate the transaction.
     SuccessFactors' shareholders will receive $40 per share in cash under the offer which undervalues the company, according to the complaint..
     Lead plaintiff Sanjay Israni says "there was no auction, no market check and no shopping of the company. Indeed, the Board failed to solicit even one other potential bidder to seek their interest in acquiring SuccessFactors."
     SuccessFactors performed well recently and future growth prospects are high as the cloud-based industry is on the rise, but these factors were not taken into consideration during the "flawed process" used to negotiate the sale.
     SuccessFactors' board not only failed to seek out other buyers, Chief Executive Officer Lars Dalgaard is accused of negotiating in "unsupervised meetings" with SAP representatives, snagging himself a "lucrative" post-transaction position with SAP's cloud business while he continues in his role with SuccessFactors.
     Meanwhile, preclusive deal protection devices allegedly ensure no other competing offer is made and shareholders are unsure of whether to tender their shares due to misrepresentations and omissions made in a December 16 Recommendation Statement filed by SuccessFactors with the SEC, the complaint states.
     The suit seeks class action certification and seeks to stop the transaction which will expire on Jan. 18, 2012.
     The plaintiff is represented by Francis M. Gregorek, Betsty C. Manifold, Rachele R. Rickert, and Patrick H. Moran of Wolf Haldenstein Adler Freeman & Hertz in San Diego, Marc S. Henzel in Bala Cynwyd, Pa. and Joseph Levi and Eric M. Andersen of Levi & Korinksy in New York.