(CN) - Shareholders claim in a class action that a $616 million merger between Thomson Reuters Corporation and FX Alliance is unfair, allowing corporate directors to pocket tens of millions of dollars at investors' expense.
FX Alliance describes itself as a "leading independent electronic platform," that gives "institutional clients an edge in foreign exchange trading." It became publicly traded on February 9, 2012 upon the completion of an initial public offering of 5.98 million shares of common stock priced at $12 per share.
Under the deal, Reuters would pay $22 cash per share of FX common stock, a price shareholders say is too low. The only ones receiving legitimate consideration, they say, are FX corporate officers who are poised to walk off with millions.
"FX's largest shareholder, investment firm Technology Crossover Ventures, along with the company's Chairman and Chief Executive Officer Philip Z. Weisberg and Chief Financial Officer John Cooley, who collectively own approximately 32.5 percent of FX's outstanding shares, have each agreed to render their shares into the offer. Notably, Weisberg is expected to pocket approximately $35 million as a result of his holdings and unexercised options in company stock," the complaint states.
Lead plaintiff Michael Rubin claims the deal comes at a time when FX is expanding its business, launching a "multibank options trading platform by which the company's clients can, in a single platform, trade spot, forwards, swaps, non-deliverable forwards, precious metals and money markets, as well as price and trade options," the complaint states. "In fact, within the brief five months as a publicly traded company, FX's stock reached a pre-deal high of $18.72 per share, 56 percent more than its IPO price."
The merger agreement allegedly discourages other offers by excluding a "go shop" period and offers "special benefits to insiders" such as the exchange of cash for outstanding and non-exercised stock options, accelerated vesting, payment to continuing employees for any change in control or retention bonuses and indemnification of company directors for six years after the transaction's close for all liabilities and claims related to their service with FX.
The class is Joseph Weiss and Richard Acocelli of Weiss & Lurie in New York.