CHICAGO (CN) – The directors of human resources firm Hewitt Associates are selling the company too cheaply to Aon for $4.9 billion in cash and stock to boost their own bank accounts, according to a shareholder class action in Cook County Court.
Hewitt shareholders say Aon’s merger offer of $50 per share in cash and shares undervalues Hewitt, which has weathered the recession well.
Hewitt’s directors accepted the offer this month.
“Recent earnings and results indicate the company is moving in a positive direction and so does not need an infusion of cash that results in a recapitalization that strips the company’s stockholders of control of the company absent an auction or other value maximization process,” shareholders claim.
“In short, Hewitt’s has been growing, and will continue to grow, even in these turbulent economic times.”
The directors also improperly agreed to accept $2.5 billion in cash and 64 million Aon shares “so as not to change Aon’s credit rating,” shareholders say.
This “will eliminate the opportunity for Hewitt stockholders to fully participate in the company’s good fortunes as they will be relegated to a minor stake in the overall entity moving forward,” according to the class action.
The lawsuit cites press releases going back to 2009 that tout the company’s burgeoning earnings and “positive momentum.”
At least one analyst set a $55 per share price target for the company and said Hewitt was “worth waiting for,” according to the complaint.
“While the director defendants of Hewitt should seek out other possible purchasers … to obtain the highest possible price, or seek to enhance the value of Hewitt for all its current shareholders, they have instead wrongfully allowed Aon the valuable assets of Hewitt at a bargain price, which under the circumstances here, disproportionately benefits Aon and the director defendants,” the complaint states.
“These tactics … are an attempt by certain defendants to aggrandize their personal positions, interests and finances at the expense of and the detriment of the Hewitt public stockholders.”
Defendants are nine Hewitt directors and Aon Corp. Shareholders want the merger blocked and unspecified damages.
The class is represented by Adam Levitt of Wolf Haldenstein.