An investor in THMD shares filed a lawsuit in State Court against directors of Thermadyne Holdings alleging breaches of fiduciary duties arising out of their attempt to sell Thermadyne Holdings Corp. too cheaply to private equity firm Irving Place Capital.
According to the complaint the plaintiff alleges that directors of Thermadyne Holdings breached their fiduciary duties owed to Thermadyne Holdings Corp. (NASDAQ:THMD) for agreeing to sell the Thermadyne through an unfair process at an unfair price.

On Tuesday, October 05, 2010, Thermadyne Holdings Corporation (NASDAQ: THMD) had announced that it has entered into an agreement to be acquired by affiliates of Irving Place Capital, a middle-market private equity firm, in a transaction valued at approximately $422 million, excluding fees and expenses. Under the terms of the agreement, Thermadyne Holdings (NASDAQ: THMD) shareholders will receive $15.00 per share in cash for each share of Thermadyne’s common stock. According to Thermadyne Holdings Corp. its board of directors unanimously approved the transaction and the offer represents a premium of 18 percent over the average closing share price of $12.71 during the last 30 trading days ending October 4, 2010 and a 25 percent premium over Thermadyne’s average closing share price of $12.05 during the last 90 trading days ending October 4, 2010.

But the plaintiff alleges that the offer represents no premium at all for THMD investors but rather a discount to Thermadyne's stock price, and company directors sold out for $15 a share though the stock hit $15.19 the day before the deal was announced. Shares of Thermadyne Holdings Corp. (NASDAQ: THMD), which traded in response to the takeover news on Tuesday at $15 per share, traded the day before the announcement as high as $15.15 per share and at least one analyst’s target price for the stock is $18.35 per share. Thermadyne Holdings Corp. shares THMD reached an all time high of $22.50 per share in 2008. Among other things the plaintiff also alleges that the offer was far too cheap, given Thermadyne's tremendous growth. Thermadyne Holdings Corp. reported over the past four years 12month revenue between $347.65million to $516.91million and Thermadyne quadrupled its growth in the second quarter of 2010 and is on pace for a record-breaking year.

In addition, so the plaintiff, the sale process is unfair to THMD investors, since the defendants agreed to preclusive deal provisions, such as a non solicitation provision and a $6.44million termination fee with up to $2million expenses, in the proposed merger agreement that are designed to protect against the threat of alternate bidders and guarantee that Irving Place Capital will not lose its preferred positions.
Furthermore the plaintiff alleges that a vote in favor of the proposed acquisition is virtually guaranteed, thus sale process is a done deal, since Angelo, Gordon &Co. L.P., who owns approximately 33.2% of Thermadyne’s outstanding stock, have already entered into an agreement with Irving Place Capital to vote their shares in favor of the proposed acquisition, and the company’s executive and board control another 6.5% of Thermadyne’s outstanding stock.