(CN) - Shareholders of Interline Brands claim they are "being cashed out at an unfair price," and seek to halt the company's $1.1 billion acquisition by affiliates of GS Capital Partners.
Diane Cohen sued Interline Brands, nine corporate officers, P2 Capital Partners, GS Capital Partners VI Fund, and two affiliates in Delaware Chancery Court.
Interline distributes maintenance, repair and operations products for the facilities maintenance industry, government properties and hardware retailers, according to the complaint.
GS Capital Partners is Goldman Sach's vehicle for large corporate equity investments. P2 Capital is an investment firm and shareholder of Interline.
"Interline enjoyed tremendous growth in fiscal year 2011, boasting sales of $1.24 billion, which was a 14.9 percent increase over sales from 2010. Additionally, gross profit in 2011 was $426.5 million, an 11.6 percent increase compared to the $414.2 million in the prior year. Net income for the 2011 fiscal year increased $9.8 million to $37.7 million compared to $27.9 million in 2010," the complaint states.
On May 29, 2012, Interline announced that it accepted P2 Capital's offer to acquire the company for $25.50 per share, a transaction valued at $1.1 billion including the assumption of debt.
"Given the Company's recent strong performance and its promising outlook and positioning for growth, the Proposed Transaction consideration is inadequate and undervalues the Company," the complaint states. "Meanwhile, while the Company's shareholders are being cashed out at an unfair price, the Company's management, including defendant [Michael] Grebe, will have the opportunity to invest in the post-transaction Interline ... In addition, it appears that management will retain their positions following consummation of the Proposed Transaction."
Cohen also claims that the proposed transaction includes a prohibitive termination fee that "illegally restrain[s] the Company's ability to solicit or engage in negotiations with any third party regarding a proposal to acquire all or a significant interest in the Company."
She seeks an injunction prohibiting the proposed acquisition and damages for breach of fiduciary duty, and aiding and abetting.
Cohen is represented by Brian Long of Rigrodsky & Long.