Alfa Buyout, Is it Stealing?

According to an article in the Birmingham News Friday, August 17, 2007, eight shareholders of Alfa Corp. filed a lawsuit opposing the proposed buyout of Alfa by three affiliated companies which own 55 percent of Alfa stock.  The lawsuit was filed in Delaware by attorneys John Somerville, of Galloway & Somerville, LLC in Birmingham, Alabama, and Frank DiPrima, an attorney in New Jersey.  Somerville and DiPrima helped HealthSouth Corp. shareholders recover $31 million from Richard Scrushy.

The shareholders who filed the suit own almost 900,000 shares of Alfa stock, and they believe that the affiliated companies are attempting to steal the company at an unfair price.  Two similar lawsuits have been filed as well.  According to the minority shareholders, the deal is rife with conflicts of interest because most of the directors and officers of the three affiliates are also directors and officers of Alfa Corp.  Consequently, they are sitting on both sides of the deal to the detriment of the minority shareholders.

Is it surprising in this day and age that a large corporation’s shareholders would try to enter into a deal which would favor the officers and directors over the minority shareholders (owners of the company)?  When will the public wake up?  How many corporate scandals do we need to see before we realize why corporations want to take over the court systems and move everything to confidential arbitrations?  Corporations like confidentiality so they don’t have accountability.

Stay tuned to see the end of this one, but my money will be on a large settlement in favor of the minority shareholders because, in the end, that will be the fair deal where both sides profit.


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