(CN) - Investors filed a class action against gaming company Pinnacle Entertainment as it's set to be acquired by Penn National Gaming Inc. for $2.8 billion.
Lead plaintiff George Smith filed suit in the U.S. District Court for Nevada against Pinnacle and several of the company's chief officers and directors alleging violations of the Securities Exchange Act.
Based in Las Vegas, Pinnacle owns and operates 16 gaming and racing entertainment businesses in nine states. Pennsylvania-based Penn National is in similar business.
The two companies announced the merger on Jan. 2, 2018, where Pinnacle investors will receive $20 per share in cash and 0.42 shares of Penn National stock for a total purchase price of $32.47.
Investors take issue with the numbers claiming the price is "inadequate in light of the company's recent financial performance and prospects for future growth."
The lawsuit also alleges that Pinnacle filed a registration statement with the SEC that left out important information concerning the company's financial projections.
According to the complaint, J.P. Morgan, serving as Pinnacle's financial advisor, used the financial projections in formulating its fairness opinion as to whether investors should vote in favour of the deal.
The class is represented by Martin A. Muckleroy of Muckleroy Lunt, LLC in Las Vegas. Of counsel: James M. Wilson, Jr. and Robert W. Killorin of Faruqi & Faruqi LLP in New York.
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