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Ancestry.com Inc., the world's largest family-history website, was sued by shareholders who contend they will be shortchanged in a proposed $1.6 billion buyout by Permira Advisers LLP.
Permira, a London-based private-equity firm, agreed to pay $32 a share for Ancestry.com, the companies said Oct. 22. That's 41 percent higher than Ancestry.com's closing price on June 5, the last day of trading before the company hired a financial adviser in connection with a possible sale.
"The consideration shareholders will receive is inadequate" and they "are being unfairly cashed-out" given the company's recent performance, investor John Heck said in a complaint filed in Delaware Chancery Court in Wilmington. A Michigan-based pension fund also filed a similar suit over the buyout.
Ancestry.com, based in Provo, Utah, has more than 2 million subscribers, with 39 million family trees and about 4 billion profiles for people to track family histories, according to court documents.
Heck asked the court to block the buyout as currently proposed and to consider awarding damages and legal fees.
Lawyers for the Pontiac General Employees Retirement System, a Michigan-based pension fund, contend Spectrum Equity Investors, one of Ancestry.com's largest shareholders, has used its position to dominate company directors and push the $32-a- share offer.
"At least five of the nine members of the board have significant ties to Spectrum or senior management" the fund's attorneys said in their Delaware Chancery Court suit.
At Spectrum's insistence, Ancestry directors rejected a $35-a-share offer for the genealogy company to back Permira's $32-a-share bid, the fund's lawyers said in the complaint.
"The board entered an underpriced deal with the buyout group in violation of duties owed to the company's public shareholders," the fund's attorneys said.
Ancestry.com rose 2 cents to $31.66 in Nasdaq Stock Market trading today. The shares have risen 38 percent this year.
The cases are Heck v. Ancestry.com, 7983, and Pontiac General Employees Retirement System v. Paul Billings, Delaware Chancery Court (Wilmington).