PARIS -- As expected, a group of minority shareholders of La Redoute has decided to take legal action regarding the merger between La Redoute and its majority shareholder, Pinault-Printemps.
The Association for the Defense of Minority Shareholders (ADAM), a nonprofit organization based in Chartres, France, issued a summons to La Redoute Wednesday. A hearing is scheduled for May 3 at the Commercial Court of Roubaix, France, where La Redoute is headquartered.
In this action, ADAM is acting on behalf of French and American shareholders. The College Retirement Equity Fund and the Guy Wyser-Pratte arbitrage firm on Wall Street are among the American investors opposed to the merger.
Several members of the Pollet family, which founded La Redoute's mail order business in 1922, are among the French investors.
In a statement, ADAM explained that the shareholders it represents are seeking more for their La Redoute shares. The terms of the merger say that for each of their shares, La Redoute shareholders would receive 0.91 shares of Pinault-Printemps.
Overall, the shareholders -- especially the Americans -- consider the deal to be undervalued by about 30 percent, based on the "promising future of mail order in Europe," ADAM said.
ADAM hopes its action will initiate negotiations to produce a fairer deal, and hopes it will set a precedent that will help subsidiaries whose parent firms wish to absorb them.
ADAM will ask Roubaix's Commercial Court to postpone a meeting of shareholders from both firms, originally scheduled for May 18, to get shareholder approval for the merger. It will also ask the Court to review the terms of the merger.
Pinault-Printemps could not be reached for comment Thursday.
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