An investor in AGAM stock filed a lawsuit in State Court against directors of AGA Medical for allegedly breaching their fiduciary duties arising out of the attempt to sell Aga Medical Holdings too cheaply to St. Jude Medical
According to the complaint the plaintiff alleges that the defendants breached their fiduciary duty owed to Aga Medical (NASDAQ:AGAM) investors by attempting to sell AGA Medical via an unfair process at an unfair price.

On Monday, Oct 18, 2010, AGA Medical Holdings (AGAM) and St. Jude Medical had announced that the Boards of Directors of both companies approved an agreement under which St. Jude Medical will acquire all of the outstanding shares of AGA Medical for $20.80 per share in a cash and stock transaction valued at approximately $1.3 billion, including the assumption of approximately $225 million in outstanding debt.

Shares of Aga Medical Holdings, Inc (NASDAQ: AGAM) traded at about $15 per share before the announcement and jumped to $20.68 per share after the takeover was announced.

But the plaintiff says the proposed transaction is the product of a flawed process that resulted from the board’s failure to maximize shareholder value and deprived AGA Medical’s public shareholders of the ability to participate in AGAM Medical’s long term prospects.
The plaintiff alleges that the proposed transaction is particularly troubling in the light of the fact that defendant and company co-founder, Franck L. Gougeon, who beneficially holds approximately 20% of AGA Medical’s outstanding common stock and Welsh Carson Anderson & Stowe, which beneficially holds approximately 45 percent of AGA Medical’s outstanding common stock, thus a combined 65% have already entered into a tender and voting agreement and that the proposed transaction will go forward if St. Jude receives the tender of a least a majority of the company’s shares outstanding.
In addition the plaintiff claims the proposed transaction is the result of an unfair process exacerbated by the unfair terms specified in the merger agreement, such as a $32.457million termination fee, a matching right, a no solicitation provision and other defensive measures in effort to effectively preclude any other bidders that might be interested in paying more than St. Jude for the company.
Furthermore the plaintiff alleges that the consideration to be paid to AGAM investors is unfair and grossly inadequate, because, among other things, the intrinsic value of AMG Medical is materially in excess of the amount offered in the proposed transaction, giving due consideration to AGA Medical’s anticipated operation results, new asset value, cash flow profitability and established markets. AGAM shares traded at almost $18 in April 2010. Aga Medical Holdings 12months total revenue went from $127.53million in 2006 to $198.71million in 2009. AGA Medical reported in the first two quarters $51.28million, respectively $53.75million Total Revenue.