Kratos/HenryBros close delayed

 - 
12/10/2010

The Kratos/ Henry Brothers deal, originally scheduled to close yesterday, Dec. 9, is now scheduled to close next Wednesday, Dec. 15.

The merger was supposed to be approved at a stockholder meeting yesterday, but that timing was apparently derailed by a sharehold lawsuit. Henry Brothers announced yesterday that it is settling a claim brought by an individual stockholder, even though Henry Brothers believes the claim to be without merit.

The lawsuit, a putative shareholder class actions suit "Atoll Advisors v. Henry" was filed by an individual shareholder in New Jersey, according to Henry Brothers.

From the Henry Brothers statement:

"Although HBE believes that the action is without merit, it entered into the memorandum of understanding to avoid the risk of materially delaying the proposed merger with Kratos and to minimize the expense of defending the action. The settlement and dismissal with prejudice, if completed and approved by the court, will resolve all of the claims that were or could have been brought in the action, including all claims relating to the merger (other than claims for appraisal under Section 262 of Delaware law).

The memorandum of understanding provides for the settlement and dismissal with prejudice of the action, subject to customary conditions, including completion of appropriate settlement documentation, consummation of Kratos's proposed acquisition of HBE by merger and all necessary court approvals."

As part of the settlement, Henry Brothers agreed to make "certain disclosures" about the proposed merger that were contained in a Nov. 9 proxy statement supplement. That supplement was mailed to HBE stockholders yesterday, and stockholders are being given a few days to consider the additonal information, which included details of fees paid and stock positions held by different parties. The merger vote is now scheduled for Dec. 15.

The Henry Brothers statement notes that its Board of Directors still supports the merger. "HBE's Board of Directors has not withdrawn, changed or otherwise modified its unanimous recommendation in favor of the proposed merger with Kratos."