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Shareholders challenge $1.46B Aeroflex acquisition

Aeroflex Holding Corp. in Plainview on May 20,

Aeroflex Holding Corp. in Plainview on May 20, 2014. Credit: Newsday / Audrey C. Tiernan

At least two shareholder lawsuits, including one filed in state Supreme Court in Mineola, are challenging the $1.46 billion acquisition of Plainview-based Aeroflex Holding Corp. by a British aerospace contractor.

The class action lawsuit filed in Nassau County against Aeroflex, its 13-member board of directors and buyer Cobham PLC charges that the directors violated their fiduciary duty to shareholders.

The action demanding unspecified damages and legal fees was filed on behalf of a shareholder by attorneys Juan Monteverde and James Wilson Jr. of Manhattan law firm Faruqi & Faruqi. After the acquisition was announced, more than 15 law firms published news releases declaring plans to investigate terms of the deal on behalf of shareholders.

A second lawsuit was filed by the Wilmington, Delaware, firm Andrews & Springer.

Monteverde did not respond to a request for comment. A call seeking comment from Aeroflex drew no response.

Shares of Aeroflex closed up 7 cents Thursday to $10.57.

Under terms of the deal, Cobham PLC would pay $10.50 per share for Aeroflex and assume $540 million of its debt.

The acquisition, negotiated in consultation with the private equity firms that own a majority of Aeroflex stock, was approved by Aeroflex's board and was expected to close later this year. The Nassau lawsuit, however, said the deal fails to optimize shareholder returns by barring Aeroflex from soliciting competing bids and allowing Cobham to match any rival offer should one arise. The legal papers also point up the connection of Aeroflex directors to the company's private equity owners.

Aeroflex, founded in 1937, was taken private in 2007 by Veritas Capital, Golden Gate Capital and the private equity arm of Goldman Sachs. The firm went public again in 2010, but the private equity firms retained a majority stake.

Director Ramzi Musallam, for instance, is a partner at Veritas Capital and director Prescott Ashe is a managing director at Golden Gate Capital.

The Aeroflex sites in Plainview and Hauppauge with nearly 300 workers would become part of Cobham's Advanced Electronic Solutions unit, which has locations in Philadelphia and Lowell, Massachusetts. Aeroflex has 2,600 employees at 20 locations.

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