(CN) - A class claims DigitalGlobe is offering an unfair price for GeoEye stock in a merger deal between the two satellite imaging companies valued at $900 million.
Dan Behnke sued GeoEye Inc., 10 of its corporate officers, DigitalGlobe Inc., 20/20 Acquisition Sub, and Worldview LLC in the Eastern District of Virginia.
GeoEye is the world's largest space imaging company, with two Earth-imaging satellites. "It owns more than 614 million square kilometers of color Earth imagery," according to the complaint. DigitalGlobe, which owns four satellites, also sells earth imagery, as well as imagery analysis, to defense and commercial customers.
On July 23, 2012, GeoEye signed a merger agreement with DigitalGlobal, a deal worth $900 million. When the merger is complete, DigitalGlobe shareholders will own 64 percent and GeoEye shareholders will own 36 percent of the combined company.
"Pursuant to the terms of the Merger Agreement, GeoEye shareowners will have the right to elect either: (1) 1.137 shares of DigitalGlobe common stock and $4.10 per share in cash; (2) 100 percent of the consideration in cash ($20.27); or (3) 100 perfect of the consideration in stock (1.425 shares of DigitalGlobe common stock), for each share of GeoEye stock they own. The ultimate amount of cash and stock that GeoEye shareholders will receive, however, is subject to proration depending upon the elections of GeoEye shareholders, such that the aggregate consideration mix reflects the ratio of 1.137 shares of DigitalGlode common stock and $4.10 per share in cash," the complaint states.
The deal allegedly undervalues GeoEye, given that the company's shares traded at $24.83, $4.56 higher than DigitalGlobe's offer, just three months ago.
Behnke also says that DigitalGlobe entered into voting agreements with certain shareholders, representing 22 percent of the voting block, to approve the merger to the detriment of other shareowners.
Behnke is represented by Rober Cynkar and Daniel Cohen with Cuneo Gilbert & Laduca in Alexandria, Va., Stuart Davidson and Cullin O'Brien with Robbins, Geller, Rudman & Dowd in Boca Raton, Fl., Randall Barron, David Wissbroecker, and Rick Atwood with Robbins Geller, Rudman & Dowd in San Diego, and Patrick Powers with Powers Taylor in Dallas.