BR&B Files Lawsuit for GSI Commerce Shareholders

3/29/2011 - On March 29, 2011, Barrack, Rodos & Bacine filed a shareholder action for the Southeastern Pennsylvania Transportation Authority on behalf of the public stockholders of GSI Commerce, Inc. (“GSIC”). The case names as defendants each member of GSIC’s board of directors as well as eBay Inc. (“eBay”) in connection with eBay’s proposed acquisition of GSIC through a merger. On March 27, 2011, GSIC and eBay disclosed that they had entered into a definitive merger agreement, which provides that GSIC’s shareholders will receive $29.25 per share in cash, or a total consideration of approximately $2.4 billion. In connection with the merger, eBay will also divest 100% of GSIC’s licensed sports merchandise business and 70% of GSIC’s ShopRunner, Inc. and RueLaLa, Inc. businesses to NRG Commerce, LLC, a newly-formed company owned by GSIC’s founder and CEO, defendant Michael Rubin. eBay will also loan $467 million to NRG, and retain a 30% stake in RueLaLa and ShopRunner. As part of the deal, Rubin has agreed to invest additional cash of $31 million in NRG.

The complaint alleges that proposed $29.25 per share acquisition price for GSIC shareholders significantly undervalues the company and the proposed transaction amounts to, in essence, a Rubin-led leveraged buyout of key GSIC assets. The complaint alleges that the members of GSIC’s board of directors breached their fiduciary duties by agreeing to the merger at an inadequate price, and without a reasonable independent process and a fair opportunity to seek and secure the best sale price for GSIC. The complaint also alleges that the board included excessive defensive merger terms in the agreement, including providing eBay with unlimited matching rights. Moreover, the complaint alleges that the proposed merger would allow defendant Rubin, GSIC’s chairman, chief executive officer, and owner of 6.4% of the company’s stock, to take significant and value-laden company assets private and reap their true value for himself and his company, NRG, while GSIC shareholders are cashed out at a bargain price. The case Southeastern Pennsylvania Transportation Authority v. Rubin, et al., Case No. 6323, is pending in the Delaware Court of Chancery.

If you have any questions about this case, please contact BR&B associate Lisa M. Lamb by telephone at (215) 963-0600 or by email at