Energy storage device manufacturer Maxwell Technologies, Inc. and its board of directors are on the receiving end of another lawsuit, this time filed in California, alleging they failed to provide material information to stockholders regarding a potential acquisition by Tesla.
According to the proposed class action, the defendants filed a solicitation/recommendation statement with the SEC that encouraged stockholders to tender their shares in favor of a merger with Tesla through which the company would purchase Maxwell shares for $4.75 each. The statement allegedly misrepresented and omitted information that stockholders needed in order to take an educated stance on the proposed deal.
The lawsuit says the defendants’ filing failed to clearly disclose Maxwell’s financial projections and the data behind its financial advisor’s fairness evaluation of the merger. These omissions worked to “depress the future financial outlook” of the company in order to make the deal “appear more favorable,” the case alleges.
Additionally, the suit claims the defendants’ statement failed to disclose executives’ potential conflicts of interest, including whether any individuals will remain with the company after the merger. The case points out that Maxwell insiders stand to receive substantial financial benefits for securing the deal, with some set to receive “golden parachute compensation” should they be terminated following the merger. Having this information would provide stockholders with “illumination concerning motivations that would prevent fiduciaries from acting solely in the best interests of the Company’s stockholders,” the case argues.
The suit seeks to freeze the expiration of the merger offer until stockholders are provided with the necessary information to adequately assess whether they support the deal.