Tuesday, November 10, 2009
Landry's Buyout Deal Hits Snag - Shareholder Class Action Filed Against Fertitta
NEW CHAPTER IN FERTITTA-LANDRY'S SAGA
Nov. 10, 2009. Shareholder Derivative Action Against Tilman Fertitta filed in Harris County District Court to Stop Buyout of Landry's Restaurants, Inc.
2009-72839 - BIANCANALA, RALPH vs. FERTITTA, TILMAN
[click case style above to read 14-page class action complaint in pdf]
EXCERPT OF ALLEGATIONS & RELIEF SOUGHT
[FROM THE PETITION]:
II. NATURE OF DISPUTE
2. Plaintiff brings this action individually and as a class action on behalf of the public shareholders of Landry's Restaurants, Inc. ("Landry's" or the "Company") in connection with the proposed sale of Landry's to Tilman J. Fertitta ("Fertitta") for $14.75 per share, pursuant to a proposal made by Fertitta and accepted by Landry's on November 3,2009 (the "Buyout").
3. The consideration that Fertitta has stated he will offer to Landry's shareholders in the proposed acquisition is unfair and grossly inadequate, because, among other matters, the intrinsic value of Landry's common stock is materially in excess of the amount offered, giving due consideration to the Company's growth and anticipated operating results, net asset value, and future profitability. The entire fairness standard of judicial review applies to all aspects of the proposed transaction because (1) Fertitta stands on both sides of the deal and (2) the purported special committee established by Landry's is not independent and disinterested. Additionally, various stock and bond analysts who cover Landry's described the offer as "cheap" and that Fertitta stands to benefit because the Defendants have "fatigued shareholders" with their shenanigans and repeated attempts to consummate this Buyout over the last two years.
4. If the proposed Buyout is successful, Landry's will no longer be a publicly traded company and Plaintiff and other public shareholders will no longer possess ownership in the Company. Accordingly, "a going private transaction is one of the few corporate transactions that drastically alter the nature of a stockholder's holding. For that reason, these transactions receive relatively close scrutiny from the courts and merit extra care from the directors involved on both sides of he transaction." Fiduciary Duties and Standards of Review in the Context of Going Private Transactions, Elizabeth A. Nowicki, Tulane University School of Law.
* * *
Plaintiff respectfully requests that this Court:
(a) Declare this to be a proper class action;
(b) Enjoin, preliminarily and permanently, any acquisition of the Company under the terms presently proposed until the Board of Directors has taken all steps to ensure a fair and proper process to maximize value for all Landry's stockholders;
(c) Declare the termination fee provisions of the Proposed Buyout to be unfair, unreasonable and improper deal protection devices, and enjoining the payment of any termination fee to the Fertitta Defendants or its affiliates;
(d) Declare that Defendants have breached their fiduciary duties to Plaintiff and the class and that the Fertitta Defendants aided and abetted such breaches;
(e) A ward pre-and post judgment interest, attorney's fees, expert fees and other costs, in an amount to be determined; and
(f) Grant such other and further relief as the Court deems appropriate including damages plus interest.
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