NextWave Wireless Inc. (WAVE:US), the wireless technology provider, was sued by a shareholder who contends AT&T’s $600 million takeover offer undervalues the company’s shares.
The shareholder, Burt Weiss, said in a filing today in Delaware Chancery Court that directors (WAVE:US) have a duty to get the best price for the shares and instead agreed to sell the company at an initial $1 a share, with possible further contingent payments, without conducting an auction or other market-check.
The deal is also unfairly designed to “cure the massive debt owed by the company to several of its officers and directors,” including senior and subordinated note-payoffs, “lucrative severance payments” and vested stock options, according to the lawsuit, filed in Wilmington.
The companies said Aug. 2 that Dallas-based AT&T would buy San Diego-based NextWave to add more network capacity for services such as mobile Internet access.
Jeff Seedman, a spokesman for NextWave at Finn Partners in San Francisco, said the company had no comment on the suit.
The complaint alleges that common stockholders were originally slated to get $6 a share, later reduced to $1, and that if the deal is consummated, some NextWave executives may receive cash incentive awards of $1 million each or more.
NextWave rose 1 cent to $1.31 in over-the-counter trading at 1:51 p.m. in New York.
Weiss is asking a judge to block the transaction under its present terms and to award damages to investors.
The case is Weiss v. NextWave, CA7821, Delaware Chancery Court (Wilmington).
To contact the reporter on this story: Phil Milford in Wilmington, Delaware, at email@example.com
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org