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At least five different shareholders of the horse racing website YouBet.com Inc. have expressed disillusion over a proposed merger with Churchill Downs, Inc.
Charles Proctor of the Los Angeles Business Journal reports that these individuals have filed lawsuits in Los Angeles Superior Court alleging that Churchill Downs is underpaying for the Burbank-based company.
Two weeks ago, the Louisville, Ky. company, which owns the track where the Kentucky Derby is held, announced it would acquire YouBet for $127 million, or about $2.84 a share. YouBet traded for as low as $2.22 a share just before the merger announcement.
Churchill Downs wants to pay with a combination of stock and cash but the plaintiffs are trying to put a stop to the merger.
The Los Angeles Business Journal listed names of the plaintiffs including Wayne Witkowski, George Bullmore, Peter McManus, Charles Seeger and Zahava Rosenfeld. Two of the attorneys did not return e-mails.
The lawsuits charge that YouBet executives did not uphold their fiduciary duty to shareholders because they entered an agreement that undervalued the company, the Business Journal reports. Plaintiffs feel they could have held out for a better deal since YouBet's stock was trading at more than $3.70 in August and was projected to hit $4.
The Kentucky Derby is the single most anticipated betting event of the year based on Gambling911.com research.
Jagajeet Chiba, Gambling911.com
