Class Action Claims 21st Century Fox Shareholders Lack All Necessary Information

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A lawsuit has been filed against Twenty-First Century Fox and its board of directors on behalf of a proposed class of public stockholders. 

The 22-page lawsuit centers on the proposed $71.3 billion acquisition of Twenty-First Century Fox by The Walt Disney Company, announced on June 20, 2018. Under the terms of the agreement, Twenty-First Century Fox stockholders will receive $38 per share, the complaint says, with an election to receive their consideration in either cash or stock subject to 50/50 proration and further tax liability adjustments. The case states that once the transaction becomes final, Twenty-First Century Fox stockholders, assuming their assets are subject to zero tax adjustment, will own between 17 and 20 percent of the company, while Disney stockholders will own between 80 and 83 percent.

The proxy statement submitted by the defendants to the Securities Exchange Commission (SEC) June 28, 2018, urging stockholders to vote in favor of the acquisition “omits or misrepresents” material information needed by proposed class members to make an informed decision either in support of or against the deal, the lawsuit alleges. More specifically, the suit claims the proxy statement fails to disclose information relevant to Twenty-First Century Fox’s “intrinsic value and prospects” going forward, namely that it lacks any projections or forecasts for Hulu and details of “certain operating synergies” projected by the defendants. From the complaint: 

“The Proxy Statement was prepared, reviewed, and/or disseminated by the defendants. It misrepresented and/or omitted material facts, including material information about the financial analyses performed by the Company’s financial advisors, the actual intrinsic standalone value of the Company, and potential conflicts of interest faced by the Company’s financial advisor, Goldman. The defendants were at least negligent in filing the Proxy Statement with these materially false and misleading statements.”