An ActivIdentity investor filed a lawsuit in State Court against members of the ActivIdentity board of directors over alleged breaches of fiduciary duties arising out of their attempt to sell ActivIdentity Corp. too cheaply to ASSA ABLOY AB.
According to the complaint the plaintiff alleges that members of the ActivIdentity board breached their fiduciary duties owed to ActivIdentity Corp. (NASDAQ: ACTI) investors by agreeing to sell ActivIdentity via an unfair process at an unfair price.

On Tuesday, October 12, 2010, Fremont, California based ActivIdentity Corporation, (NASDAQ: ACTI) had announced that it has entered into an agreement to be acquired by ASSA ABLOY AB, the parent company of HID Global, in a cash transaction at a price of $3.25 per share, or approximately $162 million.

ActivIdentity Corporation said the offer represents a premium of approximately 43% over the closing price of ActivIdentity shares on Friday, October 8, 2010 and a premium of 48% over the 20-day average of closing prices.

Even though shares of ActivIdentity Corp. (NASDAQ: ACTI), which traded before the news at $2.27 per share, increased in response to the buyout announcement to $3.21 per share or by over 40%, shares of ActivIdentity Corp. traded as early as April 29, 2010 at $3.19 per share and April 26, 2010 at $3.20 per share, and at least one analyst has set a price target of $4.50 per share for ActivIdentity stock, leaving Activ Identity investors with practically no premium.

The plaintiff alleges also that, while ACTI stockholders receive no premium, ActivIdentity insiders have made sure that their own personal interests are protect, such as compensation packages of ActivIdentity executives promising them, in effect, a big payoff at the sale of the company, that just have been approved less than two months ago.

In addition the defendants, so the lawsuit, have agreed to onerous deal protection provisions in the merger agreement, including a no-solicitation provision that prevents other buyers from having access to ActivIdentity’s confidential information, which is necessary to formulate a bid except under extremely limited circumstances, a force-the-vote provision that required the board of directors of ActivIdentity to submit the proposed acquisition to a shareholder vote even if a superior proposal is made and the board changes its recommendation, and to a termination fee that requires ActivIdentity to pay $1.25million if the merger agreement is validly terminated, and even $5million in cash if the proposed acquisition is terminated in favor of a superior proposal.