Nashua Corp. may be sued over sale
A Pennsylvania law office is weighing a lawsuit against Nashua Corp., based upon claims that the company’s pending $44 million sale to a Connecticut company is unfair to investors.
The law firm, Brodsky & Smit, LLC, issued a statement Friday saying the deal is unfair, in part, because Nashua Corp. stock has traded at much higher prices than the proposed buyer Cenveo Inc.
Nashua Corp.’s stock traded at about $9 a share for most of 2008, the statement said, while Cenveo stock has traded as low as $1.68 in 2009.
However, the statement does not mention current stock prices, which for both companies fall in the mid-range of those extremes. Cenveo was valued at about $5 per share Friday, while Nashua Corp. traded around $6.50.
The sale, announced Thursday, would give shareholders $6.13 per share in Cenveo stock and 75 cents per share in cash, for a total payout of $6.88.
Brodsky & Smith did not return a phone call seeking comment.
The law firm’s statement also said the investigation concerns “possible breaches of fiduciary duty and other violations of state law,” but did not elaborate on what those are.
Reached Friday, Nashua Corp. Chief Financial Officer John Patenaude declined to comment, except to say he had not heard about the potential suit.
Nashua Corp., founded in 1849, is one of Nashua’s oldest and best-known companies. The company makes labels and specialty paper products, including paper used for movie theater tickets and ATM receipts.
It says by becoming part of a larger business, it will be more efficient and serve its customers better. Nashua Corp. has about 650 employees in four states, while Cenveo employs about 10,000 worldwide.
Cenveo, a commercial printer and packaging company, says the purchase will allow it to expand new products and services and enhance its current business.
Lately, Nashua Corp. has been struggling financially. In 2008, the company’s net loss was $19.8 million. The company lost $300,000 in the first quarter of 2009, according financial information released Thursday.
The 2008 loss came despite cutbacks that included closing two U.S. facilities, cutting jobs and suspending contributions to some employees’ 401(k) retirement plans.
The sale to Cenveo includes the acquisition of Nashua Corp.’s debt. Both boards of directors have approved the deal, which is expected to be finalized this summer.