Cal-Maine board votes to forego plan to go private
by Becky Gillette
Published: November 17,2003
Cal-Maine Foods’ proposal to go private was withdrawn November 6 after the company’s board of directors voted to terminate previously announced plans to become a privately-held company.
However, the company’s move came amid allegations that the plan to go private was an effort to maximize on the company’s very bright earning prospects in the year ahead at the expense of public shareholders.
The company, however, said it had been planning to go back private long before egg prices improved.
Cal-Maine’s (NASDAQ: CALM) stock value increased sharply after the privatization offer was withdrawn, going from $9.46 November 5 to $16 per share five days later — an increase of 69%. The stock traded at $3.26 a year ago.
Stockholder lawsuits against Cal-Maine were filed starting in mid-August after the terms of the going private deal were announced. The lawsuits alleged that the offer of $7.35 per share was unfair because Cal-Maine — the country’s largest egg producer — was positioned to make large profits due to the best egg prices seen in years.
For the first quarter of fiscal 2004 ending August 31, the company showed a net income of $7.8 million, or 66
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