An investor in shares of Zoran Corporation (NASDAQ:ZRAN) filed a lawsuit against member of the board of directors of Zoran Corporation for allegedly breaching their fiduciary duties arising out of their attempt to sell Zoran too cheaply via an unfair process to CSR PLC.
According to the complaint the plaintiff alleges, among other things, that the consideration to be paid to Zoran shareholders is grossly unfair, inadequate, and substantially below the fair or inherent value of Zoran. The lawsuit further alleges that the board of directors of Zoran breached their fiduciary duties by not acting in Zoran shareholders' best interests in connection with the sale process of Zoran.

On Sunday, Feb. 20, 2011, Zoran Corporation and CSR PLC had announced that they have entered into a merger agreement under which Zoran Corp. will merge with CSR PLC for an equity value equivalent to approximately US$679 million. Under the terms of the proposed merger Agreement, Zoran Corp shareholders (ZRAN) will receive 1.85 ordinary shares of CSR PLC in the form of American Depositary Shares for each share of Zoran common stock held or a value of US$13.03 per share of Zoran (ZRAN) common stock. In addition, CSR PLC announced that it intends to return up to US$240 million to shareholders via an on-market share buyback program. Zoran Corp said the implied offer price represents a premium of approximately 39.9% to the closing price of each share of Zoran Corp. common stock of US$9.32 on 18 February 2011, the last Business Day before this announcement, and a premium of approximately 44.0% to the average closing price of shares of Zoran common stock over the past twelve months.
Indeed ZRAN shares traded recently at $9.32, however ZRAN shares also traded as high as $9.96 per share on Feb 1st and as high as $12.01 per share in March 2010. Furthermore shares of Zoran Corporation traded during 2006 as high as $28.27 per share.

Furthermore the calculation of an implied value of $13.03 per ZRAN shares is based on a 434 pence per CSR share price with an USD/GBP exchange rate of 1.6234.
However, on Monday CSR shares fell to 394.72 pence on February 21, and CSR shares traded during January as low as 351.66 pence, respectively during December at 317 pence per CSR share. Given those recent CSR stock prices Zoran shareholders will receive a value of $10.56, respectively $9.52 per ZRAN share, leaving Zoran investors with no premium based on ZRAN’s February trading high.

Even though Zoran’s 12months Total Revenue decreased from $507.36million in 2007 to $357.34million and its net Income from $66.19million decreased to a substantial Net Loss of $215.73million in 2008, Zoran Corp. was able to lower its Net Loss from 2008 to $47.64million in 2010. On February 3, 2011, Zoran reported revenues of $74.2 million compared to consensus Wall Street expectations of $69.2 million. Furthermore, upon closing, Levy Gerzberg, Co-Founder and Chief Executive Officer of Zoran, will join CSR's board of directors. Additionally, Zoran must pay CSR a minimum $12.2 million termination fee if Zoran accepts a superior offer to the CSR offer.