Robbins LLP: Acquisition of Nortek Inc. (NTK) by Melrose Industries PLC (MRO) May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Nortek Inc. (NASDAQ: NTK) by Melrose Industries PLC (London: MRO). On July 6, 2016, the two companies announced the signing of a definitive merger agreement pursuant to which Melrose Industries will acquire Nortek. Under the terms of the agreement, Nortek shareholders will receive $86.00 for each share of Nortek common stock.
Is the Proposed Acquisition Best for Nortek and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Nortek is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $86.00 merger consideration represents a premium of only 37.6% based on Nortek’s closing price on July 5, 2016. This premium is significantly below the average one-day premium of nearly 85.87% for comparable transactions within the past three years. Further, the $86.00 merger consideration is significantly below the target price of $95.00 set by an analyst at Imperial Capital LLC on August 5, 2015. In the last three years, Nortek traded as high as $92.96 on August 20, 2015, and most recently traded above the merger consideration – at $91.62 – on August 24, 2015.
On May 12, 2016, Nortek reported strong earnings results for its first quarter 2016. Nortek reported net sales of $613.9 million for the three months ended April 2, 2016, a 7.2% increase from the same period of the prior year. Nortek also reported GAAP operating earnings of $28.9 million for the three months ended April 2, 2016, a 275% increase from the same period of the prior year. In commenting on these results, Nortek President and Chief Executive Officer Michael J. Clarke remarked, “Over the past few years, we have made significant investments to improve our operations and reposition the business for long-term, sustainable growth. The benefits from these investments are showing up and we’re feeling really good about our start to the year and momentum across the business.”
In light of these facts, Robbins LLP is examining Nortek’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Nortek shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Nortek shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.