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GREENSBORO - Master salesman James "J.R." Ridinger is facing a challenge to his biggest sales pitch yet: a $28 million bid to take publicly traded Market America private.
In a proposed class action lawsuit, a Market America shareholder is suing Ridinger and his fellow managers, claiming the executive team's buyout price is too cheap given the company's runaway profits. Based in Greensboro, Market America is a direct-sales firm whose business model resembles that of Amway and Avon, among others.
Ridinger, Market America's CEO and majority stockholder, in October proposed to buy out the public shares of his 10-yearold firm for $8 a share; at the time, Market America was trading at $4.45. The stock price had long been stuck in that range, below even the company's book value.
Citing financial records showing booming profits, plaintiff David Osher said in court papers filed in Guilford County Superior Court that Ridinger and his fellow top managers timed the Oct. 17 buyout plan to "freeze out Market America's public shareholders in order to capture for themselves Market America's future potential without paying an adequate or fair price."
Telephone messages left with Osher's attorney were not returned.
Richard Hall, Market America general counsel, described the law suit as being filed by a habitual plaintiff whose law firm, Schiffrin & Barroway of Bala Cynwyd, Pa., specializes in shareholder suits.
"It is fairly routine litigation," Hall said. "In any going-private transaction, to have someone like this on the horizon is common."
Sherry Jarrell, assistant professor of finance at Wake Forest University's Babcock Graduate School of Management, said shareholder suits challenging management-led buyouts...