Filing alleges Univision board of selling at an unfair price.
A shareholder has filed a proposed class action suit against Univision Communications, trying to stop the acquisition of the company by a group of private equity investors.
The suit, filed on June 27 in Los Angeles Superior Court, alleges that the board of directors failed to seek the highest possible price for the company and had chilled potential offers, allowing assets to be acquired at an unfair price to benefit the directors personally. It names chairman/CEO A. Jerrold Perenchio, vice chairman Robert Cahill and 10 other members of the board of directors as defendants.
Univision announced on June 27 the execution of an agreement in which a group of private equity investors will acquire the company for $36.50 per share. Madison Dearborn Partners, Providence Equity Partners, Texas Pacific Group, Thomas H. Lee Partners and Saban Capital Group will pay in cash for the shares and assume $1.4 billion in debt. The transaction is valued at about $13.7 billion, according to the complaint.
The suit claims that Univision represented to its shareholders that it engaged in a fair auction process, but it "failed to aggressively negotiate with at least one potential buyer" -- Grupo Televisa led by chairman/CEO Emilio Fernando Azcaragga Jean, a former Univision board member.
A Grupo Televisa press release on the same day claimed that Univision and its advisers refused to enter into any discussions after its initial bid despite repeated offers to discuss its proposal, the complaint alleges.
The suit refers to a Los Angeles Times article that reported on alleged dissension among the Univision directors and personal animosity between Perenchio and Azcaragga.
The shareholder asks the court to certify the suit as a class action and to enjoin the directors from implementing the proposed merger of Univision and the private equity groups.
Univision properties inclue the largest Spanish-language television and radio networks in the United States. The deal was expected to close in the spring of 2007 subject to shareholder approval, regulatory approval and customary closing conditions.