Alberto Culver has agreed to alter key features of its acquisition agreement with Unilever that shareholders had asserted prohibited enhanced value from competing bidders.
Earlier this year CosmeticsDesign-Europe.com reported how Unilever were set to acquire Alberto Culver for $37.50 per share having agreed with the board of directors.
Failure to seek best possible bid
However, the majority shareholders filed a lawsuit in Delaware Chancery Court, alleging that Alberto Culver had negotiated only with Unilever and had neither sought out other bids nor had canvassed the market to determine that the proposed transaction was the best deal available for shareholders.
Moreover, shareholders asserted that the Unilever transaction was sufficiently locked up at the time of its announcement that other potential bidders were effectively precluded from proposing a superior offer for the beauty company.
The shareholder group, led by Oklahoma Firefighters, City of Riviera Beach, Laborers Local 235 and KBC Asset Management, were jointly represented by shareholder and corporate governance law firms Grant & Eisenhofer and Bernstein Litowitz Berger & Grossmann.
Amended key settlement features
As part of the settlement, Alberto Culver will eliminate the matching rights it had granted to Unilever; lower any break-up fee the company may be obliged to pay by $25m to $100m; and be prepared to promptly provide any superior bidder with the same confidential documents that had been shared with Unilever.
In addition, the beauty care firm will amend its proxy statement to provide shareholders with substantially more information about the proposed transaction and process, and will postpone a scheduled shareholder vote on the proposed Unilever transaction.
The vote will commence on December 17, 2010, to give shareholders more time to analyse the transaction and also give potential suitors more time to consider a higher bid.
"This settlement removes the barriers to any potential acquirer who wants to put forth a superior bid… If there is a better bid out there, it should emerge and Alberto Culver shareholders will have a chance to evaluate it," Stuart Grant, co-managing director of Grant & Eisenhofer, explained.
Co-lead counsel Mark Lebovitch, a partner with Bernstein Litowitz, added, “We believed that Alberto Culver's board did not provide an adequate level of confidence that they had achieved the best deal for the shareholders. This settlement does just that."
The settlement is still subject to approval by the Delaware Court of Chancery. If approved, it will resolve all litigation concerning the sale of Alberto Culver.