shareholders to get more buyout info

AP News
Posted: Dec 17, 2012 4:16 PM

WILMINGTON, Del. (AP) — A Delaware judge on Monday declined to delay a Dec. 27 stockholder vote on the $1.6 billion acquisition of genealogy website by a group led by European private equity firm Permira Advisers. But he ordered that shareholders be given more information before they vote.

Chancellor Leo Strine Jr. ordered that shareholders be told about the reluctance of the company's financial adviser to issue an opinion on the fairness of the deal based on May financial projections.

Shareholders also must be told about a deal-protection measure that prevented other bidders from even asking permission from after Permira's winning auction bid for the opportunity to submit a better offer, the judge said.

Neither of those details was included in the proxy statement sent to shareholders of Provo, Utah-based

Despite his order that more information, Strine declined to block the Dec. 27 vote, which attorneys suggested could be affected by higher taxes next year. attorney William Savitt said shareholders "will almost certainly be better off getting their premium money this year rather than next."

Permira's offer of $32 per share represents a premium of nearly 10 percent of the previous day's closing price in October. has said the offer represented a 41 percent premium over its closing price in early June before reports surfaced that the company had retained a financial adviser for a possible sale.'s shares, which hit a 52-week high of $33.80 in early August, closed down four cents Monday at $31.87.

Dissident shareholders alleged that president and CEO Timothy Sullivan and chief financial officer Howard Hochhauser had conflicts of interest and favored Permira's offer over those of other private equity funds because they would be able to roll over up to $82 million in existing equity into the new privately owned company.

Strine said there was no evidence in the current court record to question the motives of the sellers, noting that its common for private equity funds to want to retain current management after a buyout and expect executives to take a stake in the new company.

The plaintiffs also allege that the financial projections that's financial adviser, Qatalyst Partners suggested were too optimistic and were changed shortly before the deal was announced to justify the buyout.

Strine said shareholders should have more information before voting about the reluctance of Qatalyst to give an opinion about the fairness of the deal until the revenue projections were changed., which operates a website for researching family history, claims more than 2 million paying subscribers. It says more than 10 billion records have been added to its site over the past 15 years. The company develops and acquires systems that digitize handwritten historical documents. It works with government archives, historical societies and religious institutions around the world.

The company went public in 2009 and reported earnings last year of $62.9 million, or $1.29 per share, on nearly $400 million in revenue.