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Apple's AuthenTec buy already being investigated for class-action suit

post #1 of 46
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Following the announcement of Apple's purchase of AuthenTec on Friday, a pair of law firms are "investigating" the security company's board of directors for possible breaches of fiduciary responsibility.

Law firms Levi & Korsinsky and Rigrodsky & Long, P.A. are looking to wrangle shareholder class action lawsuits on allegations that AuthenTec's board of directors purposely undervalued the company in its $356 millon sale to Apple.

Documents released by the two law firms note an investigation is currently underway and ask for shareholders to sign up for representation if a class action suit is indeed initiated.



An online announcement from Levi & Korsinsky notes of the buyout: "Under the terms of the transaction, AuthenTec shareholders will receive $8 per share of AuthenTec stock they own. The transaction has a total approximate value of $350 million."

According to the firm, the "investigation concerns whether the AuthenTec Board of Directors breached their fiduciary duties to AuthenTec stockholders by failing to adequately shop the Company before entering into this transaction and whether Apple is underpaying for AuthenTec shares, thus unlawfully harming AuthenTec stockholders."

Although the investigation is directed at AuthenTec, a suit could affect Apple's acquisition of the company. Neither company has released an official statement regarding the matter.

While Apple's plans for AuthenTec remain unknown, some industry insiders have speculated the company's fingerprint-sensing technology could be integrated into a future iPhone for e-wallet authentication.
post #2 of 46

Lawsuits are not really "investigations". I think describing them either as class-action legal trolling or shareholder revolts would be more accurate. :D

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post #3 of 46
Quote:
Originally Posted by SpamSandwich View Post

Lawsuits are not really "investigations". I think describing them either as class-action legal trolling or shareholder revolts would be more accurate. :D

 

Agree. To call this an "investigation" is quite silly.

 

These sorts of nuisance filings are par for the course in most acquisition announcements. Like the vast majority, it will go nowhere.

post #4 of 46

so they're fishing for a lead plaintiff as opposed to actually doing any investigation ...
 

post #5 of 46

if ANYBODY other than Apple bought them shareholders would be celebrating.....but NO..... Apple STOLE the company, right?????

 

just add it to the list of reasons why Apple is the most sued company in America.....

 

one of the unavoidable problems with having $117Bil cash on the balance sheet....

post #6 of 46
Quote:
Originally Posted by Pooch View Post

so they're fishing for a lead plaintiff as opposed to actually doing any investigation ...
 

 

Interesting that it's cheaper to file a lawsuit first instead of actually performing an "investigation". Ridiculous, actually. If there were any justice, Apple would countersue and reduce them to ashes.

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post #7 of 46

All their shareholders just made a 66% gain in a single day ... 

 

Good luck finding someone to pity them for not making enough.

 

Lawyer trolls ...

post #8 of 46

Yeah, Apple has billions in the bank so you bet it is worth investigating whether there is cause for a lawsuit.  ;-)

post #9 of 46
Jeez, Mary, and Joseph..
post #10 of 46
Quote:
Originally Posted by Wurm5150 View Post

Jeez, Mary, and Joseph..

 

...on a bicycle.

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post #11 of 46

Many lawyers like these need to be disbarred.

post #12 of 46

Knowing that this is just troll lawyer firms is one thing.  However, the headline on this article is clearly misleading, and should be changed.  "Being investigated" is more like SEC or FTC is investing a company.  As in, serious shit is going on, potential civil and even criminal charges.  This is nothing like that.  ANYBODY can attempt to launch a lawsuit.  See any other recent buyout with a significant premium, there's literally dozens of troll companies falling over each other, trying to launch a class action suit.  Hell, all these companies ever did was pay $600 to Reuters for a press release, and hope that some stupid shareholders will fall for it.  There's no lawsuit, it's just a threat (with a press release), so it sounds "official".  

 

AppleInsider should be ashamed of themselves for putting this out as news-worthy headlines.

post #13 of 46
Quote:
Originally Posted by mjuarez View Post

Knowing that this is just troll lawyer firms is one thing.  However, the headline on this article is clearly misleading, and should be changed.  "Being investigated" is more like SEC or FTC is investing a company.  As in, serious shit is going on, potential civil and even criminal charges.  This is nothing like that.  ANYBODY can attempt to launch a lawsuit.  See any other recent buyout with a significant premium, there's literally dozens of troll companies falling over each other, trying to launch a class action suit.  Hell, all these companies ever did was pay $600 to Reuters for a press release, and hope that some stupid shareholders will fall for it.  There's no lawsuit, it's just a threat (with a press release), so it sounds "official".  

 

AppleInsider should be ashamed of themselves for putting this out as news-worthy headlines.

 

As you will learn if you stick around long enough, the excuse is that AppleInsider "isn't a news site, it's a blog"... I still think they should uphold journalistic standards since they are regularly cited by other news sites.

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post #14 of 46

Geez, lawyers. I wonder how many of them dream every night about suing Apple and its big cash hoard.  

 

It would be nice if we had a law that for every frivolous case a lawyer files, and loses, they get an appendage cut off.  A hand or a foot to start.  

 

Apple paid a 58% premium over what the market had valued AuthenTec at.   If the board of directors had not taken that offer, they could have breached their duty to the stockholders as well.  

post #15 of 46
Makes me want to investigate blunt force trauma on the heads of these lawyers.

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post #16 of 46
Quote:
Originally Posted by msimpson View Post

Geez, lawyers. I wonder how many of them dream every night about suing Apple and its big cash hoard.  

 

It would be nice if we had a law that for every frivolous case a lawyer files, and loses, they get an appendage cut off.  A hand or a foot to start.  

 

Apple paid a 58% premium over what the market had valued AuthenTec at.   If the board of directors had not taken that offer, they could have breached their duty to the stockholders as well.  

 

Technically, most companies would "shop around" their company to make certain they were getting the best return on the sale of their company, but I suppose if the premium was high enough, as it appears to be in this case, there may be less of an argument to be made.

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post #17 of 46
Quote:
Originally Posted by gyro.mac View Post

if ANYBODY other than Apple bought them shareholders would be celebrating.....but NO..... Apple STOLE the company, right?????

just add it to the list of reasons why Apple is the most sued company in America.....

one of the unavoidable problems with having $117Bil cash on the balance sheet....

I can hear it now - "Apple used a shill company to buy our company and cheat our share holders". We now want 1000 times more!
post #18 of 46
Quote:
Originally Posted by sd-diver View Post


I can hear it now - "Apple used a shill company to buy our company and cheat our share holders". We now want 1000 times more!

It sounds stupid, but that's exactly what happened in China with the iPad trademark.  Shell company set up by Apple bought it for $50K, when iPad was nowhere close to being the household name it is now.  A big part of the lawsuit, I think, was that Apple was not honest about it.  Apple ended up paying them $60M I think.  That's OVER 1000 times what Apple had ALREADY paid.

 

I honestly think in this case, these troll lawyer firms have no case.  58% premium to current market closing price is as good as it gets.

post #19 of 46
Lawyers shopping for peoples money to take as class actions are useless for getting individuals any money. The whole thing was likely started by Samsung or another company who uses the companies services.
post #20 of 46
Quote:
Technically, most companies would "shop around" their company to make certain they were getting the best return on the sale of their company, but I suppose if the premium was high enough, as it appears to be in this case, there may be less of an argument to be made.

Likely they had not even considered a sale to anyone. Then along came Apple and they started working together. Once Apple realized they are worth having they made an offer. Totally legal. No shopping required.
post #21 of 46
Quote:
Originally Posted by gyro.mac View Post

if ANYBODY other than Apple bought them shareholders would be celebrating.....but NO..... Apple STOLE the company, right?????

just add it to the list of reasons why Apple is the most sued company in America.....

one of the unavoidable problems with having $117Bil cash on the balance sheet....

Yep. As I recall the stock is only valued at like $5 a share. But because it's Apple folks think they should get like $800 a share 'because Apple can afford it'.
post #22 of 46
Quote:
Originally Posted by SpamSandwich View Post

Technically, most companies would "shop around" their company to make certain they were getting the best return on the sale of their company, but I suppose if the premium was high enough, as it appears to be in this case, there may be less of an argument to be made.

At least one story I read claims that Apple isn't planning to consume the company but leave it in tact as a subsidiary and the stockholders are keeping their stock shares etc, which are likely to jump in value just based on the Apple connection.

So it sounds like some facts need to be checked before we know what the score really is
post #23 of 46

On the other hand, as an AAPL shareholder, it does make me happy that they're actively looking for companies out there to buy.  And they're not only looking in the US either, I think Anobit was a privately held Israeli company.  So, they probably have people looking at this all over the world.  I also like they're focusing on small companies with lots of potential.  Very easy to integrate, and you're mostly getting them for IP and the talent pool.

 

I can imagine being in that M&A department must be really exciting.  You've got more money than God, what would be the best way to spend all that money?  

 

I also expect the Kodak patent sales to go to the Apple-led group next week.  Unless it's some ridiculous price, I'm pretty sure between Apple and Microsoft will scrounge up for it, and then extract royalties/payments from Google, Samsung, et al.

post #24 of 46
Quote:
Originally Posted by battiato1981 View Post

All their shareholders just made a 66% gain in a single day ... 

 

Good luck finding someone to pity them for not making enough.

 

Lawyer trolls ...

 

I bought AUTH a few days ago. I don't feel hoodwinked.

post #25 of 46

I would love to have a fingerprint scanner on a future Iphone =)

post #26 of 46

Just a bunch of shysters. Ignore these parasites and they'll go away.

post #27 of 46

Price was fair considering company's balance sheet. This is just a law firm trying to spread its name around even though they know there is no class action that will come of it.

These guys have tried this with several companies already. 

post #28 of 46
Quote:
Originally Posted by charlituna View Post

Yep. As I recall the stock is only valued at like $5 a share. But because it's Apple folks think they should get like $800 a share 'because Apple can afford it'.

I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?
post #29 of 46
Quote:
Originally Posted by JeffDM View Post

I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?

The synergies that the acquirer thinks (s)he can bring to the target.
post #30 of 46
Quote:
Originally Posted by JeffDM View Post

Quote:
Originally Posted by charlituna View Post

Yep. As I recall the stock is only valued at like $5 a share. But because it's Apple folks think they should get like $800 a share 'because Apple can afford it'.

I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?

With small companies a large proportion of the shares may be owned by the officers of the company.  It may take a large premium to persuade them to sell, rather than

continuing to control the company and realizing (what they believe to be) its great potential for growth.  There also may be venture capitalists who were involved in funding

the startup who need to be satisfied.

post #31 of 46
Quote:
Originally Posted by JeffDM View Post


I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?

The whole is greater than the sum of its parts, essentially. For the reasons mentioned above (Synergies, control etc.). Also, the value of a company is increased by interest in buying it (Demand dictates price) so a premium has to be offered to account for that increase too.

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post #32 of 46
so a class action suit because there was not an insider information leak!.
it seems to me that they are being sued because they did not state that apple is about to buy us, who wants to pay more?

if apple paid the going rate, instead of 58% more, then i can see a law suit...
post #33 of 46
Quote:
Originally Posted by JeffDM View Post

I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?

A number of reasons:

1. You're assuming that there's only one value for a stock, but in reality, every owner has a different value. The current share price is the value assigned by a person who is willing to sell. Let's say that stock is owned by Bill (who values it at $20 and wouldn't sell it for less), Tom (who values it at $25 and wouldn't sell it for less) and Harry (who values it at $30 and wouldn't sell it for less). Now, a buyer comes along who is willing to pay $20 for the stock. Only Bill's shares would change hands and the 'market price' would be $20. Now, if someone wants to buy ALL the stock, they would have to pay $30 in order to get all the shares from Bill, Tom, and Harry. (In reality, it may not be possible to set the price high enough to get ALL the shares, so you may have to settle for getting most of the shares and then force the remainder of shareholders to sell after you control the company).

In short, 'market price' is set by people who are willing to sell. 'Acquisition price' is set by people who are not.

2. Supply and demand. When there is increased demand for a stock (from any source), the share price goes up. When someone expresses interest in buying a company, the shareholders' expectations of share price will increase. Even if you try to buy shares on the market without disclosing your interest (although there are strict limits on how much stock you can buy without disclosure), it will drive the price up. In the above example, after you have Bill's shares, if you want to buy more, you need to pay $25.
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post #34 of 46

Apple to class-action shareholders, "maybe we won't buy and you can keep your 2 bit shares."

post #35 of 46
Quote:
Originally Posted by battiato1981 View Post

All their shareholders just made a 66% gain in a single day ... 

Good luck finding someone to pity them for not making enough.

Lawyer trolls ...

But they could have made 70%! And the Lawyers could easily get 30% of those profits as fees.
post #36 of 46
Quote:
Originally Posted by msimpson View Post

Geez, lawyers. I wonder how many of them dream every night about suing Apple and its big cash hoard.  

 

It would be nice if we had a law that for every frivolous case a lawyer files, and loses, they get an appendage cut off.  A hand or a foot to start.  

If you really want this to stop, chose a different appendage to start with.

post #37 of 46
Quote:
Originally Posted by mjuarez View Post

It sounds stupid, but that's exactly what happened in China with the iPad trademark.  Shell company set up by Apple bought it for $50K, when iPad was nowhere close to being the household name it is now.  A big part of the lawsuit, I think, was that Apple was not honest about it.  Apple ended up paying them $60M I think.  That's OVER 1000 times what Apple had ALREADY paid.

I honestly think in this case, these troll lawyer firms have no case.  58% premium to current market closing price is as good as it gets.

Get into the real world here. All major companies use proxies when buying trademarks and sometimes copyrights, and even patents. If $55,000 was what Prosoft thought the trademark was worth, then that was what it should have been sold for.

Meanwhile, Apple produced a contract showing that the Chinese company did indeed sell this trademark in China, and the person signing the contract for Prosoft was the same guy saying that they didn't sell the trademark in China. The Chinese courts aren't known for treading fairly with foreign companies. The $60 million was a ripoff.

As far as fiduciary duty is concerned, it's more complex. A board doesn't HAVE to shop their company around if they think they are getting a good enough deal. There is more to these deals than the money on the table.

On the other hand, if Google or Samsung are willing to bid much higher, then they might have to entertain those bids, assuming that the deal isn't already closed.

Apple has bought a lot of companies, and those deals weren't challenged. So have other companies. Google paid $12.5 billion for Motorola when the company on that day was valued at $6.5 billion because they were afraid that they would be outbid, and they desperately wanted it.
post #38 of 46
Quote:
Originally Posted by Radjin View Post

Likely they had not even considered a sale to anyone. Then along came Apple and they started working together. Once Apple realized they are worth having they made an offer. Totally legal. No shopping required.

But very often, once a company receives an offer, they do shop around. After all, if one large company is willing to pay a certain amount, it's possible that another is willing to pay more.
post #39 of 46
Quote:
Originally Posted by JeffDM View Post

I never understood why companies are bought well above share price. If the market determines the share price, then what justifies such a premium?

Usually, there's about a 30% premium, so the price here is a very good one for them.

There are intangibles, such as goodwill involved. Also, why would a company be willing to sell if there was no premium?
post #40 of 46
Quote:
Originally Posted by SpamSandwich View Post

 

As you will learn if you stick around long enough, the excuse is that AppleInsider "isn't a news site, it's a blog"... I still think they should uphold journalistic standards since they are regularly cited by other news sites.

 

Haha yeah but then AI and most other blogs will have to learn proper grammar!

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