CLAYTON, Mo. (CN) – In two class actions, shareholders say Baldor Electric is selling itself too cheaply to ABB, a Swiss electrical company whose U.S. branch is based in North Carolina. The $4.2 billion deal would have ABB acquire Baldor Electric for $63.50 a share.
“The proposed transaction serves no legitimate business purpose for Baldor but rather is an attempt by defendants to aggrandize their own financial interests and enable ABB to benefit unfairly from the transaction at the expense of Baldor’s shareholders,” according to the complaints in St. Louis County Court.
“In contract, the proposed cash-out transaction will forever divest Baldor’s shareholders of their ownership interest in the company for grossly inadequate consideration and will deprive the plaintiff and the other members of the class (defined herein) of their right to share proportionately in the future success of Baldor and its valuable assets.” (Parentheses in complaint.)
Baldor stock closed at $24.68 a share on Jan. 29, and by Nov. 29, the day before the merger was announced, the stock had climbed to $45.11, an 82 percent increase.
“Rather than permitting the Baldor’s common stock to continue to trade freely and allowing its public shareholders to reap the benefits of the company’s increasingly positive prospects, the individual defendants have acted for their own benefit and the benefit of ABB, and to the detriment of Baldor’s shareholders, by entering into the proposed transaction,” the complaints state. “In so doing, the individual defendants have effectively placed a cap on Baldor’s value at a time when the company’s shareholders were just beginning to capitalize on the company’s positive and encouraging financial outlook.”
The class wants the merger enjoined. Baldor, ABB, Brock Acquisitions and 10 individual Baldor board members were named as defendants.
ABB is a Swiss-based manufacturer of generators and electrical transformers. The company’s St. Louis plant made national headlines in January this year when disgruntled employee Timothy Hendron opened fire at the plant, shooting eight and killing three, then killing himself.