DirecTV Group, the largest U.S. satellite-TV provider, was sued by investors who contend a planned combination with Douglas County-based Liberty Entertainment Inc. undervalues the shares.
Plaintiffs, including the Key West Police & Fire Pension Fund, are asking a Delaware Chancery Court judge to stop the transaction and award damages, according to a complaint in Wilmington, Del.
Officials of El Segundo, Calif.-based DirecTV said May 4 that the company would merge with Liberty Entertainment, which would be split from billionaire John Malone’s Liberty Media Corp.
Under terms of the deal, DirecTV stockholders will receive one share of single-vote DirecTV Class A common stock for each of their shares and Malone, his wife and associated trusts will get Class B common stock, carrying 15 votes a share.
Liberty Media owns 54 percent of DirecTV, according to Bloomberg data, and Malone is chairman of DirecTV. The transaction gives DirecTV control of Liberty’s Game Show Network and three regional sports channels.
The investors also say terms of the merger agreement, including a $500 million breakup fee, “deter competing bids.”
