Judge refuses to block 3M takeover of Cogent
3M Co. got clearance Tuesday to proceed with its takeover of Pasadena-based technology firm Cogent Inc., after a Delaware Chancery Court judge rejected unhappy Cogent shareholders’ challenge to the deal.
Cogent’s shares slid in after-hours trading, indicating that some investors and traders were abandoning hopes for a higher takeover offer.
The dissident shareholders alleged that Cogent’s board had breached its fiduciary responsibilities by conducting a “flawed” sale of the company last summer.
3M in late August agreed to pay $10.50 a share, or $943 million, for Cogent, which makes biometric security systems that identify fingerprints, faces and eyeballs.
But some of Cogent’s biggest investors said the 20-year-old company was worth more than that. They accused Cogent CEO Ming Hsieh of engineering a sweetheart deal for 3M and for himself.
The investors cited Japanese computer giant NEC Corp.’s interest in buying Cogent for as much as $12 a share, an offer that Cogent said was only a “non-binding indication of interest.”
Judge Donald F. Parsons sided with Cogent. From Bloomberg News:
Parsons rejected the investors’ claim that Hsieh was biased in favor of 3M because he wanted to collect a $153,000 retention bonus.
“This argument is spurious,” Parsons wrote in a decision issued in Wilmington, Del. “Hsieh’s interests appear to be closely aligned with those of the stockholders as a whole.”
Parsons also said that Cogent’s board “had good reason to think that there was a substantial risk” that a deal with NEC couldn’t be consummated.
Cogent's shares slipped 1 cent to $10.73 in regular trading, then dropped to $10.54 in after-hours trading, following news of the judge’s decision.
3M’s tender offer for Cogent stock expires on Thursday.
-- Tom Petruno