Continental shareholders file suit to block merger

May 4, 2010 1:32:09 PM PDT
There's a snag in an announced merger with Continental Airlines and United Airlines. Continental's shareholders have filed a lawsuit to block the merger, demanding a better deal. The lawsuit was filed just hours after the airlines announced the merger on Monday. This lawsuit was filed as a stockholder class action lawsuit, which means that it was filed on behalf of all Continental shareholders. The suit names Continental CEO Jeff Smisek and other directors and claims that shareholders are getting an unfair deal. The shareholders are seeking an injunction to stop the merger until they are offered a reasonable price for their shares.

According to the lawsuit against Continental, shareholders would receive $1.50 per share, less than their stock traded at two weeks ago.

While plaintiff attorneys say Continental shareholders are entitled to receive a fair value for this company as it transitions, KTRK legal analyst Joel Androphy called the class action suit frivolous, saying it certainly won't help stop this mega merger and at best it may just benefit shareholders minimally.

"We think that this merger is a result of an unfair and hurried process that has resulted in an unfair price for Continental shareholders," said Attorney Andrew Edison, who represents the stockholders.

"They may get some shareholders a little bit more benefit out of the deal, but in the long run many times the lawyers are the ones that get the money and the shareholders get very little of it," said Androphy.

Defendants will be served the paperwork and they have 20 days to respond.


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