WILMINGTON, Del. (CN) - Trouble is brewing for Keurig with shareholders claiming in court that the coffee giant's $13.9 billion merger is inadequate.
The Dec. 15 lawsuit comes just about a week after Keurig Green Mountain announced a plan for JAB Holding to buy the company at $92 a share.
Lead plaintiff Ron Berger notes that Keurig announced the rollout of its Keurig Kold line just three months earlier.
Keurig CEO Brian Kelley described the product in a press release as "the first beverage system that allows consumers to make cold ... beverages at home at the push of a button, including favorites from the Coca-Cola Company and Dr. Pepper Snapple Group."
Given the growth Keurig is poised to experience, shareholders say the merger agreement is "inadequate."
"The intrinsic value of the company is materially in excess of the amount offered in the proposed transaction," the 19-page complaint in chancery court states.
Questioning the timing of the deal, Berger also notes that Keurig apparently waited for "a temporary decline in the company's stock price" to announce the merger on Dec. 7.
Indeed, Keurig shares were trading "as high as $139" in early 2015, and approximately $158 in late 2014, according to the complaint.
Contending that the merger robs shareholders of the chance to reap benefits from the company's growth, Berger notes that that sales "exceeded expectations" in the fourth quarter of the 2015 fiscal year despite "challenging" marketplace conditions.
Keurig's literature suggests that its development of a new product just in time for the holiday season is a certain recipe for success, but its board of directors nonetheless agreed to a merger that "substantially favor[s]" the buyer and "unreasonably dissuade[s] potential suitors from making competing offers," the complaint states.
Among several restrictive clauses in the proposed merger, Berger notes that the deal also comes with a "no-solicitation provision" that forbids the board from seeking competing offers.
The proposal also contains a hefty termination fee, leaving Keurig on the hook for $475 million if the deal fails to go through for any reason, the complaint states.
Berger says Keurig's board members "stand to receive significant benefits" as a result of the merger, including the promise that they will keep their jobs and continue to operate the company despite the change in ownership.
Meanwhile, those who own the company's estimated 148 million shares of common stock say they're being left out in the cold.
The lawsuit accuses Keurig's 11-member board of breaching "its fiduciary duties of loyalty, good faith, due care and full and fair disclosure."
Berger wants a permanently injunction against the proposed merger.
Neither the U.S. nor Canadian chapters of Keurig Green Mountain returned phone calls seeking comment.
A press release on the merger said that it would "deliver significant cash value for ... shareholders."
The class is represented by Seth Rigrodsky with Rigrodsky & Long in Wilmington.