Investigation Overview
Shortly after the merger announcement an investigation on behalf of current investors of DynCorp International Inc. (NYSE:DCP), who purchased the DCP shares before April 12, 2010, over potential breaches of fiduciary duty and other violations of state law in connection with an alleged unfair takeover price and practice was announced.
The investigation by a law firm focus on potential breaches of fiduciary duty and other violations of state law by the Board of Directors of DynCorp International arising out of their attempt to sell DynCorp International Inc. (NYSE:DCP) to affiliated funds and/or managed accounts of private investment firm Cerberus Capital Management, L.P.
DynCorp International Inc, located in Falls Church, VA, is a provider of specialized, mission-critical professional and support services outsourced by the United States military, non-military United States governmental agencies and foreign governments.
On April 12, 2010, DynCorp International, Inc. (NYSE: DCP) announced that it has entered into a definitive agreement to be acquired by affiliated funds and/or managed accounts of private investment firm Cerberus Capital Management, L.P.in a transaction with a total value of approximately $1.5 billion. Under the agreement, DynCorp Internationals stockholders will receive $17.55 in cash for each share of DynCorp International common stock they own. According to DynCorp. the agreement was approved by DynCorp Internationals Board of Directors and the offer represents a premium of approximately 49% percent, based on the closing trading price of $11.75 on April 9, 2010, and approximately 50% over the 90-day average closing trading price.
Shares of DynCorp International Inc. (DCP) traded after the announcement at $17.49 per share, and at about $12 before the news. DCP shares were down from its 52weekHigh of $22.03 per share and over $26 per share in 2008.
According to an investigation by a law firm the transaction appears to be unfair to current investors of DynCorp International Inc. (NYSE:DCP) because the offer to purchase DynCorp International Inc. (DCP) appears opportunistically timed to take advantage of the current economic downturn and is grossly unfair, inadequate, and substantially below the fair or inherent value of DCP.
DynCorp International Inc. reported in 2007 Total Revenue of $2.08227billion, in 2008 $2.13976billion, and in 2009 $3.10109billion.
The investigation in particular concerns whether the DynCorp International Board of Directors breach their fiduciary duties to DynCorp (NYSE:DCP) shareholders if they agree to sell DynCorp International at an unfair price thereby harming DynCorp International Inc. and its shareholders, whether the directors of DynCorp Intl may breach their fiduciary duties by not acting in DynCorp (DCP) shareholders' best interests, and the Company may not have adequately shopped itself around if they enter into this transaction and, pursuant to this proposed transaction, affiliated funds and/or managed accounts of private investment firm Cerberus Capital Management, L.P. may be underpaying for DynCorp International Inc. (NYSE:DCP) thus unlawfully harming DCP shareholders.