Acquisition of R.G. Barry Corporation by Mill Road Capital May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of R.G. Barry Corporation (NASDAQ: DFZ) by the private equity firm Mill Road Capital. On May 2, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which R.G. Barry shareholders will receive $19.00 in cash for each share of common stock.
Is the Proposed Acquisition Best for R.G. Barry and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at R.G. Barry is undertaking a fair process to obtain maximum value and adequately compensate R.G. Barry shareholders.
As an initial matter, the $19.00 merger consideration represents a premium of just 5% based on R.G. Barry’s closing price of $18.10 on May 1, 2014. This premium is significantly below the average one day premium of over 38% for comparable transactions in the last three years. Further, the merger consideration is below the target price of $21.50 recently set by an analyst as reported by Yahoo Finance. In addition, R.G. Barry has traded above the merger consideration as recently as April 24, 2014, when it reached a high of $19.15, and the stock closed as high as $19.79 on December 20, 2013.
Notably, Mill Road Capital controls nearly 10% of R.G. Barry’s outstanding shares, raising the concern that Mill Road Capital is receiving preferential treatment in its acquisition of R.G. Barry. In connection with the execution of the Merger Agreement, Mill Road Capital agreed to vote its shares in favor of the agreement.
Given these facts, Robbins LLP is examining the R.G. Barry board of directors’ decision to sell the company to Mill Road Capital. R.G. Barry 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.
R.G. Barry 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.