Just soon after Golden Enterprises, Inc. (NASDAQ:GLDC) said that it was selling to Utz Quality Foods for about $141 million, shareholder rights attorneys at Pomerantz LLP have announced their investigation of the company. The attorneys want to establish whether the deal is in the best interest of GLDC shareholders.
What is happening at Golden Enterprises, Inc. (NASDAQ:GLDC)?
Golden Enterprises, Inc. (NASDAQ:GLDC) announced that it had entered into an agreement that would see it merge into Utz. But the deal is not expected to shake up the operations of GLDC in the sense that it will not shutter plants in Birmingham and shift north. No job losses have also been announced and it seems that the team that has been running GLDC will retain their position after the merger is closed.
The major thing that is changing is the ownership of Golden Enterprises, Inc. (NASDAQ:GLDC). The company negotiated with Utz to pay its shareholders $12 per share in the buyout transaction. If you calculate the average closing price of shares of GLDC over the past 30 days, you end up with $7. That tells you that Utz’s offer of 12 per share is a 71% premium.
On top of the seemingly lofty offer, Utz has agreed to swallow debt of $7 million in GLDC’s books. That brings the total transaction value close to $141 million.
Closing the deal
Stockholders in Golden Enterprises, Inc. (NASDAQ:GLDC) who own the majority voting shares in the company have already given the board the green light to continue with the sale of the company. That means that the major hurdle standing between the merger of GLDC and Utz is regulatory approval. If all the necessary clearances are obtained in time, Utz hopes to close the transaction in 4Q2016.
But an issue has come up that might complicate the closing of the deal. Shareholder rights attorneys at Pomerantz LLP are out to see if directors of Golden Enterprises, Inc. (NASDAQ:GLDC) are maximizing value for shareholders in agreeing to sell the company for $12 per share. If the investigations turn up potential violation of fiduciary duty, GLDC could be in for serious legal battle.
Golden Enterprises, Inc. (NASDAQ:GLDC) recently declared a dividend $0.03375 per share that will be distributed to shareholders on August 3. But the payout will only capture shareholders of record as of July 25.