AMAC directors' sale to Tunstall under investigation

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Faruqi & Faruqi, a NY-based securities firm is investigating the Board of Directors of American Medical Alert Corp (AMAC) for potential breaches of fiduciary duties in connection with their conduct related to the sale of the company to Tunstall in the all-cash deal valued at about $82.3 million. Brief note: Faruqi & Faruqi, LLP Announces Investigation of American Medical Alert Corp.

ALSO ON THIS ITEM: Editor Donna and a sharp-eyed Telecare Aware reader have picked up in the original sale announcement a hint that Tunstall itself may be subject to sale talks. See comments on Tunstall to acquire American Medical Alert Corp (AMAC). to which further comments on this item may also be added.

Update 28 September. Ed. Donna notes that Faruqi & Faruqi is not the only firm (in their case,securities) investigating a ‘breach of fiduciary duties’. There is a positive pileon of law and securities firms from last Friday on–eight through today–see Yahoo! Finance headlines. The common thread? Were shareholders underpaid for their stock in the deal with Tunstall, and did the AMAC board adequately ‘shop around’ the company to get the best deal for shareholders (also worded as “undertook a fair process to obtain fair consideration”)┬ábefore accepting the Tunstall offer. While there’s generally a flurry of this with any public company sale, particularly smaller ones, this strikes this editor as just a bit unusual. It raises several questions: many of the shareholders were not consulted or given the reason why Tunstall would be a good partner; and were there reasons other than fiduciary for the choice of Tunstall as a buyer?

Also to correct the statement expressed in the earlier posting, supposedly the acquisition price represented a 50% premium to the value of the shares the day prior to the announcement. One thing is obvious; until these are settled in court (often by a richer payout to the shareholders), it is ‘no sale’–and it is unlikely to be cleared up by end of year.