OAKLAND, Calif. (CN) - A class action challenges electronics manufacturer Oplink Communications' proposed merger with Koch Industries as a breach of fiduciary duty to shareholders.
The merger's estimated value is $445 million. If it goes through, Oplink will be managed by Molex, a Koch subsidiary.
Lead plaintiff Lori Brewerton claims that the merger is being done "by means of an unfair process, for an unfair price, and pursuant to a materially misleading Recommendation Statement."
She sued Oplink; Oplink founder and CEO Joseph Y. Liu; Oplink board members Chieh Chang, Tim Christoffersen, Jesse W. Jack and Hua Lee; Koch Industries and its subsidiary Koch Optics, on Tuesday in Superior Court.
No shareholder vote is needed to execute the merger so long as the buyer has a majority of the shares, and the offer is set to expire on Monday, Dec. 22.
Brewerton claims that the proposed merger is Oplink's effort to avoid threatened legal action from an activist investor group, Oplink Shareholders for Change.
The group consists of independent stockholders led by Engaged Capital LLC and Voce Capital Management LLC. It owned approximately 7.5 percent of the company and was formed "for the purpose of seeking to unlock value at Oplink."
The group has voiced concern over "the company's failing Oplink Connected business unit and the need for corporate governance changes."
Among the changes the group sought were the institution of an annual shareholders meeting and the nomination of two new directors to the board. Brewerton claims that Oplink proposed the merger to avoid instituting these changes.
She claims that the merger contains "deal protection services that preclude other bidders from making a successful competing offer for the company."
These include a no-solicitation provision, a provision allowing Koch four business days to match competing offers and a provision requiring Oplink to pay Koch a $15.5 million termination fee in order to accept a superior bid.
She also claims that 7.1 percent of Oplink's outstanding shares are locked up in the merger and that the recommendation statement filed with the SEC attempts to persuade Oplink shareholders to sell via "materially misleading information."
Oplink declined to comment.
Brewerton seeks class certification, declaratory relief, enjoinder or rescission of the proposed merger and damages.
She is represented by Alan Plutzik, with Bramson Plutzik, of Walnut Creek.