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Acquisition Of Pacer International, Inc. By XPO Logistics, Inc. May Not Be In Shareholders' Best Interests

Stocks in this article: PACR XPO

SAN DIEGO and DUBLIN, Tenn., Jan. 8, 2014 /PRNewswire/ -- Shareholder rights attorneys at Robbins Arroyo LLP are investigating the acquisition of Pacer International, Inc. (NASDAQ: PACR) by XPO Logistics, Inc. (NYSE: XPO). On January 6, 2014, the two companies announced the signing of a definitive agreement pursuant to which XPO Logistics will acquire Pacer for $6.00 per share in cash and a number of XPO Logistics common stock equal to $3.00 for each share of Pacer common stock, for a total consideration of $9.00.

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Is the Proposed Merger Best for Pacer and Its Shareholders?

Robbins Arroyo LLP's investigation focuses on whether the board of directors at Pacer is undertaking a fair process to obtain maximum value and adequately compensate Pacer shareholders in the merger.

As an initial matter, the $9.00 consideration represents a one day premium of 8.04% based on Pacer's closing price on January 3, 2014.  That one day premium is substantially below the average one day premium of 48.13% for comparable transactions in the last three years.  Further, the $9.00 merger consideration is below the $10.00 target price set by an analyst at PI Financial Corp. on November 19, 2013.  In addition, Pacer last traded above the offer price on December 2, 2013, trading as high as $9.10 and closed above the offer price as recently as November, 29, 2013, at a price of $9.08.  

Further, Pacer recently released its financial results for the third quarter ended September 20, 2013.  For the quarter, the Pacer earnings per share more than doubled from the same quarter 2012 to $0.08. From that same quarter of 2012, the company also reported an increase in income from operations of $2.7 million to $5.0 million while net income increased $1.7 million to $2.8 million over the same period.

Given these facts, Robbins Arroyo LLP is examining the Pacer board of directors' decision to sell the company to XPO 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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