SAN DIEGO and KENT, Wash., Sept. 26, 2013 /PRNewswire/ -- Shareholder rights attorneys at Robbins Arroyo LLP are investigating the acquisition of Flow International Corporation (NASDAQ: FLOW) by American Industrial Partners, a private equity firm. On September 25, 2013, Flow announced the signing of a definitive merger agreement under which American Industrial Partners will acquire Flow in an all cash transaction for $4.05 per share. The Flow board of directors has unanimously approved the merger agreement. The transaction is expected to close in early 2014. (Logo - http://photos.prnewswire.com/prnh/20130103/MM36754LOGO)
Is the Merger Best for Flow and Its Shareholders?
Robbins Arroyo LLP's investigation focuses on whether the board of directors at Flow is undertaking a fair process to obtain maximum value and adequately compensate its shareholders in the merger. As an initial matter, the $4.05 consideration represents a premium of just 8.6% based on Flow's closing price on September 25, 2013. This premium is substantially below the median one-day premium of 34.40% for comparable transactions in the last three years. Further, the merger consideration is below the target price of $5.00 set by an analyst at Dougherty & Company LLC on March 12, 2013. Moreover, Flow has traded above the offer price as recently as June 06, 2013.
On September 9, 2013, Flow issued a press release announcing the company's earnings for its first quarter 2014. Flow reported the company exceeded analyst net income expectations in the first quarter and exceeded analyst sales expectations for the tenth consecutive quarter. In announcing these results, Flow President and CEO, Charley Brown, commented, "We saw our order patterns and revenue stabilize in Q1, following the macro-economic driven pull back in Q4 .…We are also encouraged by early evidence of growth beyond those stable levels. The $13 million of cost reductions we announced in June are ahead of schedule, giving us confidence in our ability to achieve all of these savings, which represent more than 100% of last year's Operating Income."Given these facts, Robbins Arroyo is examining Flow's board of directors' decision to sell the company to American Industrial Partners now rather than allow shareholders to continue to participate in the company's continued success and future growth prospects, and whether they are seeking to benefit themselves.
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