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Cogent, 3M clears legal hurdle

Published 12 October 2010

3M Co. has cleared a major hurdle in its $943 million bid to acquire Pasadena, California-based biometrics firm Cogent, Inc.; a Delaware Chancery Court denied a Cogent shareholder’s motion to block the proposed acquisition of Cogent by 3M, citing the plaintiff’s inability to show reasonable probability of success on the merits of any of the claims

3M Co. has cleared a major hurdle in its $943 million bid to acquire Pasadena, California-based biometrics firm Cogent Inc.

A Delaware Chancery Court last week denied a Cogent shareholder’s motion to block the proposed acquisition of Cogent by 3M, citing the plaintiff’s inability to show reasonable probability of success on the merits of any of the claims.

3M said it expects the deal to boost its stock price by 1 cent to 2 cents per share.

Erick Galindo writes that the Minnesota-based conglomerate best known for Post-Its, made the tender offer in August. The offer had been approved by Cogent’s board and majority stockholder Ming Hsieh, who is also Cogent’s CEO.

A number of shareholders, however, have since hired attorneys to investigate whether the company’s board breached its fiduciary duty to shareholders in agreeing to sell shares at $10.50. Attorneys argue that the stock may have a buy rating as high as $14 per share.

The $10.50 price was 18 percent above the stock’s closing value at the time the deal was made. The stock, which has been as low as $7.96 and as high $11.33 in the past 52 weeks, closed at $10.53 last Thursday.

We are pleased with the judge’s ruling,” Hsieh said in a statement. “The Cogent board of directors continues to strongly endorse the proposed acquisition of the company by 3M and notes that Cogent has not received any competing bids since we announced the deal on Aug. 30.”

Hsieh has agreed to sell his stake in the company — which totals nearly 38 percent of all shares — to 3M. According to 3M, Hsieh will remain “an integral part of the combined business going forward.”

The deal still requires approval by company shareholders but is expected to be completed by year’s end.

Cogent noted that it has been advised by 3M that all applicable regulatory waiting periods with respect to 3M’s tender offer have now expired. The offer for all outstanding shares of Cogent’s common stock was set to expire at midnight Thursday.