Shareholder court action 'frivolous' say Legato

By Stuart Finlayson

Enterprise storage software provider Legato Systems has refuted claims made in two lawsuits filed by several of its shareholders in relation to the proposed US$1.3 billion acquisition by EMC.

The lawsuits allege that Legato executives timed the announcement of the acquisition to maximise their own income potential rather than looking out for the interests of the shareholders.

The disgruntled shareholders claim that Legato executives moved the EMC announcement ahead of its second-quarter earnings statement to improve the chance of the deal going through. They also allege that the same execs. contorted certain details of the buyout in order to protect an executive retention bonus plan.

While not prepared to comment directly on the dispute, a statement issued by Legato described the actions as "meritless" and said documents relating to the merger that Legato must file to the US Securities and Exchance Commission (SEC) will "detail facts to the contrary to the assertions made regarding the bonus plans."

Representatives from Legato Australia declined to comment on the issue, but a spokesperson for the company said that Legato viewed the litigation as "frivolous" and added that the company intends to defend the actions vigorously.

It is unclear why the shareholders want to put a spanner in the works of the deal, given that it is widely thought to be a fair deal that EMC have put on the table, not to mention the fact that EMC is considered to be the best fit for Legato in the market. In any case, it is thought highly unlikely that either of the two lawsuits will interfere with the completion of the deal, which is expected to be finalised in the fourth quarter of this year.

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