A spike in 3Com options trading just hours before HP's $2.7bn cash takeover bid has caught the eye of US regulators, according to reports.
3Com's call trading surged to an astounding 26-month high on November 11 - four hours before the acquisition was disclosed after the market closed that day, Bloomberg said. Now the US Securities and Exchange Commission is looking into whether someone gleaned confidential information about the deal and illegally profited, the paper reports, citing an unnamed "person familiar with the matter."
More than 8,000 3Com calls changed hands on November 11, which is 17 times the four-week average. Most were contracts conveying the right to purchase shares for $5 though the 20th, followed by December $5 calls, according to the WSJ.
HP proposed to buy 3Com at a price of $7.90 per share.
Also in the running to ankle HP's acquisition is a pair of shareholder lawsuits, filed in Delaware and Massachusetts, alleging the $2.7bn acquisition offer is an "unfair price."
The Delaware case, filed by New York attorney David Shaev on behalf of himself and 3Com shareholders, names the entire 3Com board of directors and accuses them of "attempting to deceive 3Com shareholders and unfairly deprive them of the true value of their investment in the company."
The Massachusetts case filed by Edward Tansey claims the 3Com board struck a deal "to meet their own personal objectives" rather than negotiate for the highest possible offer." It claims the deal is designed to "unlawfully divest" 3Com stockholders of their assets for a "grossly inadequate consideration."
Shareholder lawsuits demanding that a company hold out for more money are fairly common for any major acquisition, and nothing short of predictable in an enormous purchase like HP's offer for 3Com. ®
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