An investor in Lance, Inc. (NASDAQ:LNCE) has filed a lawsuit in State Court against Lance, Snyder’s and their executives and directors alleging breach of fiduciary duty for allegedly trying to sell Lance, Inc too cheaply too Snyder's of Hanover, Inc.
According to the complaint the plaintiff alleges that defendants rushed into the deal and failed to get the best value for Lance shareholders. On Thursday, July 22, 2010, Lance, Inc., located in Charlotte, NC, announced it and Snyder's of Hanover, Inc signed a agreement to combine in a stock-for-stock merger of equals that will create a combined company to be called Snyder's-Lance, Inc. Under the transaction terms, shareholders in Snyder's and Lance will each own approximately 50% of the new company after the merger. Existing Lance and Snyder's options will become options in the combined Snyder's-Lance. Additionally, contingent on the closing of the transaction, existing Lance shareholders will receive a one-time $3.75 special cash dividend. According to Lance, Inc. its board of directors has unanimously recommended the approval of the transactions to their shareholders.

Lance, Inc. shares (LNCE) traded before the news at $16.21 per share and jumped to $22.38 per share in response to the takeover news, or a 38% increase.

But the plaintiff claims that the deal undervalues the Lance, Inc. Lance shares, which were down from its 52weekHigh of $28.26 per share, traded at almost $24 per share as recent as April 29, 2010. Lance, Inc. was also able to increase its Total Revenue from $762.74million in 2007, to $852.47million in 2008, to $918.16million in 2009. Its Net Income increased from $23.84million in 2007 to $35.79million in 2009. The plaintiff alleges, among other things, that the defendants breached their fiduciary duties by failing to maximize shareholder value and that the officers and directors worked to ensure they would have jobs instead of seeking the best deal for shareholders.