A proposed class action lawsuit has been filed against CDI Corp., its board of directors, Nova Intermediate Parent, LLC, and Nova Merger Sub, Inc. over allegations that they released a misleading recommendation statement in connection with a potential merger between CDI and Nova. The suit argues that the statement omitted information concerning CDI’s financial projections and the valuation analyses performed by its financial advisor, as well as the advisor’s possible conflicts of interest.
The complaint further claims that stockholders should be informed of potential conflicts of interest among CDI’s board of directors. It notes that one of the board members is also a senior partner at Dechert LLP, a law firm that helped advise the company during the transaction. The suit argues that the recommendation statement neglects to disclose the background of Dechert’s engagement and the compensation it received, or is expected to receive, in return for its services.
Finally, the case takes issue with the alleged lack of disclosure around the background of the transaction. It argues that the defendants “have all but ensured” that an alternate buyer will not submit a superior offer to acquire CDI by including a “no solicitation” provision in the merger agreement. Furthermore, the plaintiff claims the recommendation statement fails to mention whether a provision in a non-disclosure agreement prevented another party from pursuing a merger with CDI.