Dive Brief:
- TECO shareholders opposed to the $10.4 billion acquisition by Emera announced earlier this month have filed a lawsuit claiming the $27.55/share is too low for the Tampa-based utility.
- The suit, filed in the Hillsborough County Circuit Court in Tampa, Florida, points out that TECO officials stand to profit handsomely in the deal and are ignoring their duty to shareholders.
- Analysts have predicted a smooth sale process, which placed a 30% premium on TECO's shares.
Dive Insight:
The deal for TECO Energy was announced at a significant premium to its share price, and since rumors of a potential sale surfaced the stock is up about 50%. But investors say the deal is no good for shareholders, and TECO's board of directors is pushing quickly because they will see a large windfall once the sale is complete. "Many of them can expect a big payday when the merger is consummated," the suit alleges, according to The Tampa Tribune.
TECO CEO John Ramil's stock is reportedly worth more than $20 million.
Speculation about a potential buyer had circled around companies with other regulated Florida utilities, such as Duke Energy and NextEra Energy. But the move is not a complete surprise, as Emera has been on a buying spree and has proposed 10 acquisitions since 2010.
Law firms announced "shareholder alerts" in connection with the deal as well, possibly signaling the cases could ultimately be consolidated.
Securities litigation law firm Brower Piven, based in Maryland, announced it had "commenced an investigation into possible breaches of fiduciary duty and other violations of state law by the Board of Directors of TECO Energy," and urged shareholders to contact the firm. New York-based Bronstein, Gewirtz & Grossman LLC made a similar announcement.
Philadelphia shareholder Rhoda Kanter filed the lawsuit, which alleges officials "failed to maximize the sale price for the company" and agreed to terms that "greatly favor Emera and are designed to unreasonably dissuade potential suitors from making competitive offers by including various buyer-friendly deal protection devices."
The lawsuit follows news that TECO unloaded its coal mining subsidiary earlier this week for next-to-nothing, though if coal prices rise five years, the utility will be owed some $60 million.
