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Shareholder Class Action - Corporate Transaction
The Bear Stearns Companies, Inc.
On March 24, 2008 Chimicles & Tikellis LLP filed the first shareholder class action lawsuit (“Lawsuit”) in the Court of Chancery of the State of Delaware against The Bear Stearns Companies, Inc. (“Bear Stearns” or the “Company”), JPMorgan Chase & Co. (“JPMorgan”), and certain of Bear Stearns’ officers and directors, challenging the recently amended terms of JPMorgan’s previously announced acquisition of Bear Stearns. The deal, as first announced on March 16, 2008, provided that JPMorgan would acquire Bear Stearns in exchange for .05473 shares of JP Morgan stock for each share of Bear Stearns, representing an implied Merger consideration of $2.00 per share for Bear Stearns at the time of that announcement. On March 24, 2008, however, the Merger Agreement was purportedly amended to, among other things, increase the Merger Consideration to .21753 JPMorgan shares for each share of Bear Stearns. In addition, the Amended Merger Agreement permits JPMorgan to purchase 95 million newly issued Bear Stearns shares for $10 per share, which will convey approximately 39.5% voting power to JPMorgan without approval by Bear Stearns’ shareholders (“Lock Up Stock Sale”). The Lock Up Stock Sale is reportedly expected to close on or before April 8, 2008.
On Tuesday March 25, 2008, Chimicles & Tikellis LLP and its co-counsel, the Michigan-based law firm of The Miller Law Firm, P.C., filed a Temporary Restraining Order (“TRO”) on behalf of their client Plaintiff Wayne County Employees’ Retirement System and a putative class of shareholders of Bear Stearns, seeking to stop Bear Stearns and JPMorgan from proceeding with certain provisions of their proposed Merger as recently amended.
Based on the allegations in the Lawsuit, Chimicles & Tikellis LLP seeks through the TRO to enjoin the Lock Up Stock Sale, which, if consummated by April 8, would give JPMorgan an unmerited and unapproved significant voting block that would permit JPMorgan to essentially direct that the proposed Merger, which requires majority shareholder approval, will be approved. In particular the TRO asserts that the Lock Up Stock Sale poses a threat of imminent irreparable harm to the current Bear Stearns shareholders and constitutes an unfair and inequitable disenfranchisement of the shareholders in breach of fiduciary duties of Bear Stearns’ directors. Anticipating shareholder disapproval of the Merger, JPMorgan and Bear Stearns devised this improper Lock Up Stock Sale to essentially buy the necessary votes to get the Merger done.
The Lawsuit alleges that Bear Stearns’ directors (aided and abetted by JPMorgan) breached their fiduciary duties, including the duties of loyalty and care, by failing to: fully inform themselves of the value of Bear Stearns; act in the best interests of all of the shareholders; and, implement a proper process in connection with the Merger to evaluate and investigate alternatives to the Merger. JPMorgan was put in a special and favored position with respect to any acquisition of Bear Stearns to the detriment of Bear Stearns’ shareholders.
The Lawsuit also seeks damages and preliminary and permanent relief, including, among other things, enjoining defendants from proceeding with the shareholder vote on the Merger and consummation of the Merger, requiring defendants to fulfill their fiduciary duties to fully inform themselves and duly evaluate the alternatives to maximize the value of the shareholders’ interests, enjoining the shareholder vote pending a proper process and complete disclosure, and enjoining the Merger until provisions are included or modified to ensure that the shareholders’ interests are fully protected.
If you wish to discuss this Action or have any questions concerning your rights or interests, please contact Pamela S. Tikellis, Robert J. Kriner or Zachary Naylor toll free at 1-866-399-2487 or via email at the addresses below.
CONTACT:
Pamela S. Tikellis (E-Mail: pst@chimicles.com), or
Robert J. Kriner, Jr. (E-Mail: rjk@chimicles.com), or
A. Zachary Naylor (E-Mail: zn@chimicles.com)
CHIMICLES & TIKELLIS LLP
One Rodney Square
P.O. Box 1035
Wilmington, Delaware 19899
(302) 656-2500
(302) 656-9053 (fax)
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