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In what appears to be a take-it-or-leave-it proposition, a group of majority stockholders of Usana Health Sciences Inc. reiterated Monday its offer to buy up all minority shares for $26 a share, the same price that was rejected as too low just one business day earlier.
The proposal to take the publicly traded West Valley City company private also faces a new challenge from a lawsuit by stockholders who contend that Usana Chairman and CEO Myron Wentz and other members of the board of directors were breeching their duty to stockholders by offering "a lowball price."
Wentz's Gull Holdings Ltd. and others representing 68 percent of the company's publicly traded shares announced the offer in May.
"The proposed transaction is an attempt by Gull to cash out the minority shareholders at an unfair price, under unfair terms, through improper means and with inadequate disclosure," claims the lawsuit, which was filed June 6 in 3rd District Court in Salt Lake City.
Company officials declined to comment on the allegations in the lawsuits.
On Friday, a special committee of the company's board also said the offer was too low, based on an analysis by an outside firm. It recommended that shareholders reject the offer.
Then Monday, Gull Holdings and a related company, Unity Acquisition Corp., reiterated the offer, still at $26 a share. A statement pointed only to Usana's latest earnings estimate that projected better second-quarter sales would boost the previous estimates of profits from 48 cents to 51 cents per share to 60 cents to 63 cents. Earnings per share had fallen to 46 cents in the first quarter 2008.
"Usana's earnings guidance further solidifies Gull's confidence that the financial condition related to the previously arranged financing for the transaction will be satisfied," the company said in a news release, referring to the $215 million in financing obtained to complete the purchase offer.
A Gull Holdings Ltd. spokesperson did not return a phone call seeking more details.
The lawsuit, proposed as a class action that would include all minority shareholders, says Wentz and board members Ronald Poelman, Robert Anciaux and Jerry McClain have failed in their duty to act in the best interests of all stockholders.
The $26-per-share offer represents about a 25 percent premium to the average price of Usana common stock for 30 days up to May 12, the day before the offer. But the lawsuit points out that as recently as February the stock was selling for $45 per share. The lawsuit also incudes a graph showing that shares traded as high as $60 in recent years.
"The graph demonstrates that the proposed transaction seeks to capitalize on the temporary decline in the company's stock price by attempting to purchase the minority shares of the public float at a lowball price," said the lawsuit, which indicated the stockholders would seek an injunction to halt the proposed stock sale.
Two law firms representing the stockholders in the lawsuit did not return phone calls seeking more information.
*Usana's stock closed down $1.97 or almost 7 percent Monday to finish at $26.37 a share.