Bare Escentuals shareholders call for investigation into proposed acquisition

By Simon Pitman

- Last updated on GMT

Related tags Bare escentuals Stock

Bare Escentuals shareholders have demanded investigations into the board of directors following the announcement that Shiseido wants to buy the mineral make-up player.

A number of investigations have been instigated with leading US law companies, including Bull & Lifshits, Kendall Law Group and Levi & Korsinsky to determine the processes undertaken by the board of directors to broker the deal with Shiseido.

According to Washington-based law practice Finkelstein Thompson, their investigation will concentrate 'on the potential unfairness of the price to Bare Escentuals shareholders and the process by which the company's board of directors considered and approved the transaction'.

Fair deal or not?

Levi & Korsinsky said its investigation would concentrate on whether or not the board of directors failed ‘to adequately shop the company before entering into this transaction and whether Shiseido is underpaying for Bare Escentuals shares’.

On January 14 Japanese cosmetics giant Shiseido announced that it had offered to pay $1.7bn for all the outstanding shares in Bare Escentuals.

Shiseido said it had made an all-cash tender offer and second-step merger. The first step of the merger gives Shiseido voting rights in the company, while the second step means the deal has to be approved by the SEC to legitamize it, a procedure that can take as little as five weeks.

The shareholder investigations will run concurrently with the SEC approval process and these type of procedures are routinely performed as part of deals of this kind of magnitude.

Investment world applauds acquisition.

News of the deal was well received by the financial world, which sent share prices rocketing from a closing price of $12.74 per share on January 14, to a closing price of $18.11 on January 19.

Back in August a class action was filed in California courts against directors and executives at Bare Escentuals, accusing them of misleading investors.

The company was accused of making misleading statements about the positive performance of the business from November 7, 2006 to November 26, 2007, according to a class action lawsuit filed last week in a US District Court in the Northern District of California.

Established in 1994, in the period from 2001 Bare Escentuals blossomed from an annual turnover of $30m to a current figure that is now in excess of $600m - growth that has been achieved on the back of huge interest in natural-based cosmetic products.

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