(CN) - Micronetics Inc. is selling itself on the cheap to Mercury Computer Systems, shareholders claim in a class action to block the sale.
New Hampshire based Micronetics, which manufactures microwave and radio frequency components for the aerospace industry has seen a surge in business over the last two years which shareholders say could lead to "soaring stock prices in the years to come."
The company's performance has captured "buy" ratings from several market analysts and shareholders argue they should be allowed to "reap the benefits" that "unfettered and even-handed exposure of the Company to the market could produce."
Instead, they claim Micronetics' board of directors accepted a "woefully inadequate" $14.80 per share for the company, well below its 2006 high of $20. The share price represents a market value of just over $75 million including debt.
The buyout agreement is the "product of a flawed process," the suit says, which prohibits Micronetics from soliciting better offers and requires it to give Mercury four days to top any unsolicited bids.
Such offers are unlikely the shareholders say because Micronetics agreed to pay a $2.5 million termination fee if it accepts a superior offer.
The suit asks class certification, a permanent injunction blocking the sale or damages if it goes through before the court can act, as well as legal costs.
Filed by lead plaintiff Jason Katz, the class is represented by Jessica Zeldin with Rosenthal Monhait and Goddess of Wilmington, Del.