Robbins Umeda LLP Is Investigating LaBranche & Co., Inc. Acquisition for Shareholders
Robbins Umeda LLP, a shareholder rights litigation firm, is investigating possible breaches of fiduciary duty and other violations of state law by members of the board of directors of LaBranche & Co., Inc. (NYSE: LAB) in connection with their efforts to sell LaBranche to Cowen Group, Inc. (NASDAQ: COWN).
On February 17, 2011, LaBranche and Cowen Group announced a definitive merger agreement under which Cowen will acquire LaBranche in a stock-for-stock merger transaction valued at approximately $192.8 million. If the deal closes, LaBranche shareholders will receive 0.9980 of a share of Cowen Class A common stock for each outstanding share of LaBranche common stock, representing a value of only $4.71 per share. The transaction is expected to close by the end of the second quarter or beginning of the third quarter of 2011.
The investigation seeks to determine whether LaBranche’s board of directors undertook a fair process to obtain maximum value for its shareholders, including shopping the company. Notably, the transaction represents only a 16% premium to LaBranche’s closing price on February 16, 2011. Over the past year, acquisitions in the investment brokerage industry have been at a premium of 33% on average, twice the consideration offered in the current merger agreement. Further, certain executive officers of LaBranche, holding approximately 12.5% of LaBranche’s outstanding shares, and RCG Holdings LLC, which holds approximately 44.5% of the outstanding shares of Cowen, have entered into a voting agreement to vote in favor of the transaction. Moreover, upon closing, several officers and directors of LaBranche, including Michael LaBranche, Chairman, Chief Executive Officer and President of LaBranche; Katherine E. “Wendy” Dietze, a director of LaBranche; and William “Chip” Burke, III, Chief Operating Officer of LaBranche, will join Cowen’s board of directors.