November 26, 2014 / 7:05 PM / 5 years ago

Tibco merger vote can proceed despite $100 million error -judge

Nov 26 (Reuters) - Tibco Software Inc can proceed with a shareholder vote next week on its proposed $4.2 billion buyout by private equity firm Vista Equity Partners, despite an erroneous share count that initially overvalued the deal by $100 million, a Delaware judge said.

Delaware Chancellor Andre Bouchard on Tuesday ruled that a shareholder seeking a preliminary injunction had failed to establish that Tibco and Vista agreed the merger would be consummated for an overall amount rather than at a price per share.

The plaintiff, stockholder Paul Hudelson, sued to stop the vote until after a trial on his claim that the per-share price should be $24.58 rather than $24.00.

While Bouchard called aspects of the sales process “flawed,” he allowed the Dec. 3 shareholder vote to go forward, saying the plaintiff could later pursue damages later of up to $100 million.

Tibco announced Vista’s buyout offer on Sept. 29 , implying the deal, at $24 per share, would reflect an equity value of $4.24 billion. The deal, valued at $4.3 billion, included the assumption of debt.

Days later, an employee at Goldman Sachs, which was advising Tibco, said the aggregate value in a proposed proxy statement did not “look right.”

Tibco and Goldman eventually discovered a key document had overstated the number of fully diluted shares, meaning the implied equity consideration was $4.14 billion instead of $4.24 billion.

After the discovery, Tibco’s board decided not to ask Vista to modify the $24-per-share price.

Hudelson accused Tibco’s board of breaching its fiduciary duties, with help from Vista and Goldman.

Mark Lebovitch, Hudelson’s lawyer, indicated the lawsuit would move forward.

“We are confident that no court of equity would let Vista and Goldman enjoy windfalls on account of a reckless share count error while Tibco’s shareholders needlessly suffer the loss of $100 million of the value of their company,” he said.

Representatives for Tibco, Vista and Goldman did not respond to requests for comment.

Shares of Tibco were up 0.4 percent at $24.03 in afternoon trading.

The case is In re Tibco Software Inc Stockholders Litigation, Delaware Chancery court, No. 10319-CB. (Reporting by Nate Raymond in New York; Editing by Lisa Von Ahn)

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