(CN) - Shareholders claim in a class action that sushi restaurant chain Benihana's plan to sell the fanchise firm to Angelo, Gordon & Company is raw deal that will see the company go private.
The company announced the $296 million deal back in May which would see shareholders getting $16.30 per share in cash, according to the complaint, touted as a 46 percent premium over the company's average closing price in the months prior to the announcement.
Though the chain suffered a severe drop in stock prices in 2009, the complaint states, it has since rebounded. "Remarkably the company's total revenue rose ... to $327.64 million for the 52-week period ending on March 27, 2011," the complaint says.
Investors claim the price undercuts the company's worth and that they are being excluded from a future windfall given the trend.
"Yahoo! Finance expects the share price of Benihana is expected to rise to $17.30. And, according to the Financial Times, this is the only analyst to have made a prediction on the future share price. No analyst has taken the position that $16.30 represents a fair and accurate share price," the complaint states.
Though the company was granted a 40 day "go-shop" period, the chance of finding a better deal "is severely undermined by other provisions of the merger agreement," the complaint states.
"In short, the company will face a penalty in excess of $11,000,000 in the event it considers and accepts a competing offer, even though that offer may be of greater benefit to shareholders," the complaint states, adding that the termination fee "nullifies any benefits" of the go-shop period.
Meanwhile, senior management will allegedly be sitting pretty after the "tainted" deal closes, shareholders say.
"One of the benefits of the merger is enjoyed exclusively by the board and by other company executives ... stock options used to compensate board members will become immediately exercisable even though they may not have otherwise vested ... [also] senior management of the company will continue on post-merger and enjoy the fruits of the future success of the company," the complaint says.
Headquartered in Miami, Benihana operates 96 Japanese theme and sushi restaurant nationwide and also has operations in Latin America and the Carribean, according to the complaint..
Shareholders are represented by Seth D. Rigrodsky, Brian D. Long and Gina M. Serra of Rigrodsky & Long in Wilmington, Del. and by Stewart L. Cohen and Stuart J. Guber of Cohen Placitella & Roth in Philadelphia.