Woodgrain Purchase of Huttig Prompts Class-Action LawsuitApril 18th, 2022 by Brigid O'Leary
Don Reith filed a class action lawsuit against Huttig Building Products Inc. and its board of directors last week “for breaches of fiduciary duties in connection with the Board’s efforts to sell the Company to Woodgrain Inc.”
The sale, announced in March, would see Woodgrain acquire all outstanding shares of Huttig for $10.70 per share in cash. Reith and his lawyers contend that “the Board is breaching its fiduciary duties to Huttig stockholders in connection with the Proposed Transaction by inter alia.”
Plaintiff Reith, through his lawyers, argues that the Board “execut[ed] thirty confidentiality agreements with prospective bidders that contain ‘don’t-ask-don’t-waive’ (DADW) standstills” and “fail[ed] to waive the DADW standstills following the Board’s entry into the Merger Agreement.” He also asserts that the Board “execut[ed] the Merger Agreement that, according to its terms and in conjunction with the DADW standstills,” prevent the Board from considering and accepting better proposals as well as “restricts the flow of information necessary to permit the Board to act on an informed basis and determine” if the transaction would be “reasonable and in the best interest of Huttig stockholders.”
Reith also contends that the Board misled stockholders “with respect to the terms of the NDA agreements entered into with other parties during the sale process and the Board’s ability to receive unsolicited offers from these parties,” as well as accepting an offer price he says is “inadequate and only $0.10 higher on a per share basis than the consideration offered by a strategic bidder.”
The complaint goes on to say that the “Recommendation Statement misleads Huttig stockholders to believe that other bidders involved in the sale process may make private proposals to the Board to top Woodgrain’s Offer Price,” but that bidders entered NDAs with a DADW that prevented them from making a higher bid. “The Recommendation Statement further fails to disclose material information regarding the background of the Proposed Transaction, including the details of any employment discussions Woodgrain executives had with Huttig executives.”
As a “continuous stockholder of Huttig,” Reith is filing the lawsuit on behalf himself and Huttig’s public stockholders. He is taking on Huttig Building Products, and seven (7) named individuals that comprise the “Board.”
Stay tuned to [DWM] magazine for more information on this case as it becomes available.