$22M price for Pinnacle Data too low, suits contend

Three lawsuits have been filed on behalf of shareholders of Pinnacle Data Systems, alleging that the company is being sold for a lower price than it is worth. Avnet, a Phoenix-based electronics components maker, announced plans two months ago to pay about $22 million, or $2.40 per share, for Pinnacle. Groveport-based Pinnacle is an electronics repair and logistics services company founded in 1989 that helps clients repair, refurbish, recycle and dispose of electronics products. The suits, filed in Franklin County Common Pleas Court in November, say that Pinnacle is undervalued because the company has no debt and has reported seven consecutive quarters of profits. “Pinnacle enjoys some of the highest margins among electronic repair service companies,” one lawsuit says, “and correspondingly delivers in profitability and cash reinvestment for future growth opportunities.” Avnet will “inexplicably” pay $2.40 per share for Pinnacle even though Pinnacle shares traded as high as $3.45 per share as recently as July 26, 2011, one suit says. Company shares stood at $2.38 yesterday. Pinnacle shares have traded in a range from $1.08 to $3.45 during the past 52 weeks. The purchase is subject to the approval of Pinnacle shareholders, with that special meeting scheduled for Jan. 25. In statements issued after the purchase was announced, executives at Pinnacle and Avnet said the deal is good for both companies. They said they would have no further comment about the purchase and did not return calls yesterday seeking comment. Avnet is no stranger to the Columbus market. In the fall, it acquired Broadband Integrated Resources Ltd, which has operations in Columbus and Dallas. Broadband Integrated Resources provides repair and logistics services to cable companies such as Time Warner, Comcast and Charter Communications.