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On Thursday, May 26, at 6:04 a.m., Paula Kent Meehan, founder, chairwoman and chief executive of publicly held Canoga Park-based Redken Laboratories Inc., announced she was taking her company private at $34 a share in cash.
The problem with Meehan's announcement, a review of stock trading records strongly suggests, is that it was leaked in advance to certain investors, who will score heavy profits when the buyout of the personal products maker commences on June 2. An official investigation by securities industry regulators into Redken stock trading activity has already begun.
Trading volume in Redken stock surged to 16 times normal on Wednesday, May 25, preceding her announcement, while the price of a Redken share rose $2.75 to $27 apiece.
Meehan, 57, and her husband, John Meehan, 61, together own 48 percent of Redken stock outstanding. John Meehan is chairman and president of Redken. The Meehans could not be reached for comment.
The couple announced on May 26 that they have formed an investment entity, RLI Acquisition Corp., that will bid $34 a share for Redken, and that they will tender their shares to RLI.
The trading volume and price surge...