Securities Lawsuit Takes Issue with Mattersight’s Merger Recommendation

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Mattersight Corporation and its board of directors are facing a proposed class action lawsuit that argues the defendants didn’t disclose to stockholders required information when recommending their support of a potential merger with NICE Ltd. Citing potential violations of securities law, the case claims the defendants omitted from their recommendation statement certain details concerning Mattersight’s financial projections, the valuation analyses performed by its advisor, and potential conflicts of interest among Mattersight’s insiders.

According to the complaint, Mattersight, through financial advisor Union Square Advisors LLC, contacted several potential buyers in January 2018 to gauge their interest in an acquisition of the company. The lawsuit claims the defendants chose to pursue a transaction with NICE, despite receiving better offers from other companies.

Notably, the case continues, NICE decreased its offer price only five days before the parties entered into a merger agreement – after the company received revised financial projections from Mattersight’s management. The suit claims stockholders were never offered the opportunity to review the previous projections and determine whether the revision was accurate and fair.

Furthermore, the lawsuit argues some of Mattersight’s board members were to receive significant benefits from the closing of a transaction with NICE, including future employment with the new company, cash payments from converted stock options, or “golden parachute” compensation for executives who would be terminated after the merger. The case claims stockholders were not made aware of the details of any conversations regarding board members’ future employment, including who participated, when the conversations took place, what was discussed, and whether NICE mentioned the possibility of employing Mattersight executives when presenting its initial proposals.