BYLINE: Stephen Pounds, Palm Beach Post Staff Writer
DATELINE: PALM BEACH GARDENS
BODY: Attorneys for shareholders suing The Wackenhut Corp. over its sale to Danish security firm Group 4 Falck still believe management could have found a better deal, despite the company's preliminary proxy filed last week with the Securities and Exchange Commission.
They have asked to consolidate three shareholders' suits over Group 4's $33-a-share offer for Wackenhut and hope to file an amended complaint within two weeks using fresh ammunition from the proxy. The company said in its proxy that the lawsuits could derail the sale. "In our complaint, we intend to raise issues such as price concerns. Class A shareholders are getting a haircut while class B are getting a premium," said attorney Paul Geller of Boca Raton.
Geller referred to Wackenhut's two classes of stock and their trading prices before the deal.
On March 7, the day before the deal was announced, Wackenhut's class A voting stock closed at $34.40 a share while class B nonvoting stock closed at $27.44.
According to the proxy, an undisclosed company contacted Wackenhut in February about a deal, but the two firms never made it past preliminary talks.
"We don't know what type of company it was, whether a specific offer was made or whether they were recontacted before inking the deal," Geller said.
In the Group 4 deal, Wackenhut was given 30 days to find another suitor. But after reading Wackenhut's proxy, Geller wonders whether that was enough time.
"When you look at how long it took to iron out the Group 4 deal, it is woefully inadequate," he said.
The two companies negotiated the sale over seven months.
Geller said information in the proxy about the role of investment banker Salomon Smith Barney in the deal isn't ample.
When discussions between the two companies grew serious in November, Wackenhut brought in the banking house to advise it.
Then on March 7, Wackenhut's board asked Smith Barney to render an opinion about whether the offer was fair "from a financial standpoint" to shareholders. Wackenhut has not said how much Smith Barney will be paid or whether it's contingent on the deal's closing.
"Are they an objective and independent financial adviser giving an impartial opinion or are they an interested party?" Geller said.
Wackenhut and Smith Barney would not comment.
Geller said the employment contract of Chief Executive Richard Wackenhut was modified on Feb. 19 and the proxy should have given shareholder more information about the change.
"We were disappointed that it was not adequately addressed," Geller said.
The Group 4 deal is expected to close in June. A final proxy will set a date for a shareholders meeting on the sale.