Court Denies Request to Block Cogent Sale to 3M

Cogent shareholders had sought to block the sale of the company to 3M for $943 million, saying that 3M's offer price of $10.50 per share is too low.

The Delaware Chancery Court on Tuesday denied a request from Cogent shareholders to block the proposed sale to 3M Company.

According to media reports, Cogent shareholders filed a lawsuit in September against its board of directors after 3M announced plans to acquire the company for $10.50 per share. The deal is valued at $943 million.

Court documents were available electronically, and a call to the shareholders' attorney was not immediately returned.

The suit reportedly alleged that Cogent's board attempted to sell the company to 3M at an unfair price through an unfair process. The shareholders requested an injunction to stop the sale to 3M in favor of a late, non-binding offer from NEC Corporation that was worth more.

According to media reports, Delaware Chancery Court Judge Donald Parsons on Tuesday rejected the shareholders' claim that Cogent CEO Ming Hsieh was partial to and in favor of the 3M deal because he wanted to collect a $153,000 retention bonus.

“This argument is spurious,” Bloomberg reports that Parsons wrote in his decision. “Hsieh's interests appear to be closely aligned with those of the stockholders as a whole.”

Hsieh issued the following statement on Wednesday in response to the ruling: “We are pleased with the judge's ruling. The Cogent board of directors continues to strongly endorse the proposed acquisition of the company by 3M and notes that Cogent has not received any competing bids since we announced the deal on August 30th.”

Cogent is based in Pasadena, California, and provides finger, palm, face, and iris identification systems for governments, law enforcement agencies, and commercial enterprises.

In late August, 3M announced plans to purchase Cogent through a tender offer, meaning that a majority of Cogent's outstanding shares must be tendered in support of the buyout in order for the acquisition to take place. Cogent's board unanimously recommended that shareholders accept the offer.

Maplewood-based 3M, which provides technologies for the consumer, electronics, health care, industrial, and transportation industries, is among Minnesota's 10-largest public companies based on its 2008 revenue of $25.3 billion. The company reported revenue of $23.1 billion in 2009.