NEW YORK — A May Department Stores Co. shareholder, alleging breach of fiduciary duties, filed a lawsuit against the retailer and its board members to bar Federated Department Stores Inc.’s acquisition of the retailer.
The lawsuit, which also seeks class-action status, was filed by Edward DeCristofaro in a Missouri Circuit Court in St. Louis City on Feb. 28, the day the proposed $17 billion retail merger was announced. The board members named are: John Dunham; Joyce Roché; James Kilts; Marsha Evans; R. Dean Wolfe; Michael Quinlan; Helene Kaplan; Russell Palmer; Edward Whiteacre Jr., and William Stiritz.
Neither Federated nor May officials immediately responded to a request for comment.
The lawsuit alleged that the individual defendants breached the fiduciary duties that they owed to the public shareholders of May, because they didn’t properly auction the company and invite other interested bidders, and they “failed to properly inform themselves of May’s highest transactional value.”
The court papers said that instead of “attempting to obtain the highest price reasonably available for May for its shareholders, the individual defendants spent substantial effort tailoring the structural terms of the acquisition to meet the specific needs of Federated.”
In addition, the lawsuit said the $35.50 per share price represents a “substantial discount to May’s public shareholders based on the true intrinsic value of the company and its assets.” It said that “Wall Street analysts generally concurred that the price in the acquisition is too low.”
Some analysts wrote in research notes before the deal they expected the price would be just under $ 40 a share.
This story first appeared in the March 21, 2005 issue of WWD. Subscribe Today.