Past Sensormatic employee files
BOCA RATON, Fla. -The former head of the international retail division for Sensormatic Electronics has filed a class action lawsuit claiming he and fellow shareholders were misled about the financial stability of Tyco International, the company that bought Sensormatic in a stock transaction a year and a half ago.
The lawsuit, filed by Ron Premuroso, former president of the international division for Sensormatic, names Tyco former Chief Executive Officer L. Dennis Kozlowski, former Chief Financial Officer Mark Swartz and the companyÃ¢â‚¬â„¢s board of directors at the time of the transaction as defendants.
The lawsuit claims that when Tyco bought Sensormatic for $24 per share in a stock transaction Ã¢â‚¬Å“the market price of TycoÃ¢â‚¬â„¢s stock was artificially inflated.Ã¢â‚¬Â
At the time the transaction closed on Nov. 16, 2001, between the two companies, Tyco was selling for $56.89 per share. At press time towards the end of December, TycoÃ¢â‚¬â„¢s stock was valued at around $17 per share.
Premuroso and his attorney, Paul Geller, could not be reached for comment. Officials at Tyco declined comment. Ã¢â‚¬Å“We donÃ¢â‚¬â„¢t comment on pending litigation,Ã¢â‚¬Â said Debbie Coller, vice president of communications for Tyco Fire and Security.
According to court documents filed in Palm Beach County Circuit Court, Pre-muroso claims that TycoÃ¢â‚¬â„¢s financial statements Ã¢â‚¬Å“did not disclose that senior corporate officers used the companyÃ¢â‚¬â„¢s coffers as a slush fund to pay for their own elaborate and wasteful lifestyles.Ã¢â‚¬Â
The documents also allege that Tyco acquired new businesses that are accretive to earnings Ã¢â‚¬Å“to disguise its slow growing core business.Ã¢â‚¬Â
The lawsuit comes as no surprise to industry analyst Jack Mallon, as lawsuits filed by shareholders of public companies with declining stock prices are not uncommon.
Ã¢â‚¬Å“ThatÃ¢â‚¬â„¢s the risk you take when you take stock,Ã¢â‚¬Â said Mallon, managing director of Mallon Capital.
Still, Mallon did not characterize the lawsuit as frivolous, but said that shareholders who did not have the option to sell their stock after the transaction may have the best claim.