Siemens bid sparks suit at Pyramid

Electronic News, Feb 13, 1995 by Anthony Cataldo

SAN JOSE, CALIF.--The bid by Germany's Siemens Nixdorf Information Systems AG (SNI) to acquire Pyramid Technology touched off a class-action lawsuit by shareholders of Pyramid who claim the two companies' cozy relationship has undervalued their shares in the company.

Filed in California's Santa Clara County Superior Court, the lawsuit charges that Pyramid's board of directors violated its fiduciary responsibilities by failing to solicit other bidders and declining to form an independent committee to evaluate the Siemens proposal, which initially offered a $15 per share buyout. The lawsuit stated that it was "glossly unfair for (Pyramid) to enter into any merger, acquisition or other business combination without performing a proper auction, market check or other procedure to maximize the value of Pyramid shares..."

The buyout offer has since been upped to $16 per share, though Pyramid said the new proposal was not influenced by the lawsuit, said Allan Smirni, VP and general counsel for San Jose, Calif.-based Pyramid.

"It's no surprise," Mr. Smirni said. "We don't consider (the case) to have any merit. We did an extremely thorough review and we went through an exhaustive search to determine that this is fair." He said that allegations that Pyramid failed to seek out other offers were false. "If any party had been interested they would have come forward when this was announced. We had no one come forward," he said.

SNI, the PC and software subsidiary of Munich-based Siemens AG, already owns 17.4 percent of Pyramid, which reported revenues of $218.4 million last fiscal year. In January, Pyramid announced it had again begun to turn a profit with a strong fiscal first quarter and revenues of $62.1 million.

In order to maximize their stock value, shareholders are making a case to force Pyramid to canvass third-party interest through an "open and fair auction" and are asking that Pyramid fully disclose all information about alternative offers before closing the deal. The shareholders are also seeking damages to recoup the lost profits and litigation fee