Legal move as Gateshead’s Sevcon bought for $200m

Sevcon CEO Matt Boyle

Nasdaq-listed Gateshead company Sevcon, which makes components for low carbon vehicles, said it agreed to be acquired by Michigan-based BorgWarner for $22 per share in cash.

“The total transaction value, including the assumption of indebtedness, is expected to be approximately $200 million at the closing of the transaction,” said Sevcon.

“The transaction price of $22.00 per share represents a 61% premium to the closing sale price of common stock of the company on Friday, July 14, 2017 and a 64% premium to the 30-day volume weighted average price of common stock of the company.”

Sevcon CEO Matt Boyle said: “The proposed merger with BorgWarner provides substantial value to our stockholders and the chance for Sevcon to maximize previous growth investments and capitalize on greater opportunities as a part of a much larger organization with significant market presence.”

The Sevcon board of directors unanimously approved the merger and has recommended approval of the merger by Sevcon’s stockholders.

The transaction is expected to close in the fourth calendar quarter of 2017 and is contingent on the approval of Sevcon’s stockholders and other closing conditions.

Rothschild Inc. is acting as financial advisor to Sevcon, with Skadden, Arps, Slate, Meagher & Flom LLP and Locke Lord LLP acting as legal advisors.

BorgWarner CEO James Verrier said: “This acquisition supports our existing strategy to supply leading technology for all types of propulsion systems; combustion, hybrid and electric.

“We look forward to welcoming Sevcon’s talented employees to BorgWarner.”

However, after the deal was announced, New York law firm Rowley Law PLLC said in a press release it is “investigating Sevcon, Inc. and its board of directors for potential breaches of fiduciary duty.”

Rowley Law said it is “investigating potential claims against Sevcon, Inc. and its board of directors concerning the proposed acquisition of Sevcon by BorgWarner Inc. for $22.00 per share in cash.”

Sevcon said in February that a “dissident” director had “waged a disruptive proxy campaign against the company” but that that none of the director candidates nominated by the “dissident” and his firm were elected at its 2017 annual meeting of stockholders.