An OfficeMax Inc shareholder has filed suit against the directors of the company as it seeks to stop the takeover by Office Depot Inc. The suit calls the US$1.2 billion all share buyout as 'grossly inadequate.'
The merger seeks to help the two office supplies retailers to cut down costs in light of highly competitive marketing from its online competition. The deal has also been called out for lacking details and is coming at a time when Office Depot is bucking the criticisms from its very own activist investor.
Under the proposed agreement made public last February 20, OfficeMax shares would be equal to 2.69 Office Depot common shares owned by individual stockholders.
In the complaint filed by Eric Hollander, an investor at OfficeMax, he alleged,"OfficeMax, if properly exposed to the market for corporate control, would bring a price materially in excess of the amount offered in the proposed transaction."
The individual defendants named in the suit are OfficeMax Chairman Rakesh Gangwal and CEO Ravichandra Saligram as directors of OfficeMax Inc. The suit claims breach of fiduciary duties as well as conduct detrimental to the company and its shareholders. The complaint also includes Office Depot in colluding in their breach.
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