Global Payments-Heartland Legal Snag Looms?

Lawsuits on Wall Street are nothing new. Neither are announcements that lawyers are interested in lawsuits on Wall Street. That’s because the payoff can be big if 1) lawyers can get enough shareholders to marshal opposition to corporate actions and 2) those corporate actions are stymied.

Consider the case of mergers and acquisitions that tend to dominate headlines somewhere, in some industry, on the Street. Normally, one company buys another, and the share price of the latter rises, while the share price of the former falls. And unless the premium paid for the acquired firm is a huge one, at least some shareholders, or perhaps many, will be miffed. That leads to lawsuits, blaming captains of industry for steering their respective boats aground and not holding out for higher prices.

So seems to be the case for another recently announced deal, this time between Global Payments and Heartland Payment Systems. As was announced earlier this week, Global Payments is buying Heartland for $4.3 billion in cash and stock, at a total consideration of $101.04 a share. That’s a premium of more than 27 percent to the average daily closing price in the month before the rumors of a deal hit roughly one week ago.

At least one law firm, Robbins Arroyo LLP, came out with a press release on Wednesday (Dec. 16) stating that it is looking into whether the deal is a kosher one, given the fact that the 27 percent premium is significantly below the 39 percent for “comparable transactions” as measured through the past five years. The law firm noted sanguine results reported by the Heartland management staff at the end of October, championing sales and earnings growth, and yet, according to the release, given the positive results, the question arises whether the sale is justified and fully valued or if holders should continue to “participate in the company’s continued success.”

Similarly, another firm, Rigrodsky & Long, is looking into whether this is the best possible value for the company.

It may not be that where there’s smoke there’s fire. But stay tuned.

[bctt tweet=”It may not be that where there’s smoke there’s fire. But stay tuned.”]


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.