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Sportsman's Guide sued over proposed sale
Last update: May 16, 2006 – 8:31 PM
A class-action suit has been filed against Internet and catalog marketer Sportsman's Guide and its top executives and directors, alleging that the defendants breached their duty to shareholders in negotiating terms of a proposed sale of the South St. Paul company to French retailer Pinault-Printemps-Redoute for $265 million.
The complaint, filed last week in Dakota County District Court, alleged that company officials "unjustly enriched themselves" at the expense of shareholders. Executives will receive "change of control" payments, accelerated stock options, retention bonuses and new employment contracts from the acquiring company, the complaint said. But a May 8 company filing with the Securities and Exchange Commission (SEC) says executives have agreed to waive their right to enhanced severance protection and benefits.
The suit also claims that shareholders will be shortchanged because the "sale price was based on stale results," said plaintiffs' attorney Randall Steinmeyer of San Diego. The acquisition was announced before Sportsman's favorable first-quarter results were disclosed, he said, and company officials did not disclose projections for the following quarters. The sale is expected to close in the third quarter.
Bill Bartkowski, a spokesman representing Sportsman's Guide, said the company believes the suit's allegations are without merit. "Some of the allegations bespeak a certain naivete" about customary sale terms, Bartkowski said. The company will address many of the suit's issues in its proxy statement to shareholders, expected to be filed with the SEC in the next 15 days, he said.