Investors Sue After Essendant Spurns Merger in Favor of Staples Deal

(CN) – Essendant Inc. faces a class action from investors after terminating a merger agreement with Genuine Parts Co. in favor of an offer from Staples.

The Illinois-based office supplies retailer announced the termination on Sept. 10, 2018, in a press release, and on Sept. 14, announced that it would instead accept a bid from Staples for $12.80 per share or $483 million. Genuine Parts did not counter-offer and expects a $12 million termination fee from Essendant.

According to the lawsuit, Essendant’s largest shareholder opposed the transaction but the company forged ahead and filed a solicitation statement with the Securities Exchange Commission on Sept. 24, 2018.

“The solicitation statement omits material information with respect to the proposed transaction, which renders the solicitation statement false and misleading,” the complaint states.

Essendant’s officers and directors allegedly omitted information about analyses performed by the company’s financial adviser, Citigroup Global Markets. while information about potential conflicts of interest of the company’s officers and directors was also left out, the class alleges.

The solicitation statement allegedly fails to disclose information about future employment and directorships of Essendant’s current officers and directors, nor what services Citigroup and its affiliates are providing or how much Citigroup is being paid.

Staples’ tender offer expires on Oct. 22, 2018.

The suit was filed in Delaware District Court. The class is represented by Brian D. Long and Gina M. Serra of Rigrodsky & Long, P.A. in Wilmington, Delaware and of counsel, Richard A. Maniskas of RM Law P.C. in Berwyn, Pennsylvania.

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