Stockholder Driven to Sue After Swift and Knight Merger

New to ClassAction.org? Read our Newswire Disclaimer

Swift Transportation Company and six executives of the company, along with Bishop Merger Sub, Inc. and Knight Transportation, Inc., are the defendants in a proposed class action lawsuit alleging they released misleading information to stockholders in connection with a merger between Swift and Knight. The plaintiff claims the companies failed to disclose possible conflicts of interest involving Swift’s former CEO’s support of the merger and Knight’s promise to engage him as a consultant in the new company. He further argues that the companies’ chosen financial advisor, Morgan Stanley, was also a lender to Swift’s former CEO and a member of the Knight family, but that the compensation it received or was expected to receive for these services was missing from the statement released to the public. In addition, before engaging Morgan Stanley, Swift’s board members decided to pay themselves an undisclosed amount of additional compensation for “evaluating the potential transaction,” which “already fell squarely within their responsibilities as Board members and therefore did not require or justify additional compensation,” the suit argues.

Besides omitting information that would reveal potential conflicts of interest, the company’s registration statement also failed to disclose the figures and processes used in Morgan Stanley’s financial analyses, according to the complaint. The suit argues that as a result, stockholders are unable to make any determinations about the company’s projected financial performance and cannot judge for themselves whether the proposal is a fair deal.