(CN) – Conagra Brands Inc. faces a shareholder derivative alleging the company’s top officers withheld wrongfully withheld information about internal issues spurred by its acquisition of Pinnacle Foods Inc.
Shareholder Jordan Dahl filed the lawsuit in the U.S. District Court for Northern Illinois against the Chicago-based packaged food company and several of its officers and directors alleging that from at least June 27, 2018, when the company announced the acquisition of Pinnacle for $10.9 billion, Conagra’s officers “touted” and “boasted” about the considerable benefits of the merger until admitting that they neglected to conduct due diligence before acquiring Pinnacle and that “Pinnacle’s situation was so desperate that it had been reduced to offering its retailers discounts to improve its sales figures.”
In addition, Pinnacle’s top brands were weak because of “internal problems of innovation and execution rather than external market pressures.”
Company director and executive committee member Ruth Ann Marshall, meanwhile, sold off off more than 6,000 shares for $216,000, allegedly knowing Conagra shares were artificially pumped up. Conagra is also currently facing a federal securities fraud class action lawsuit related to similar allegations.
On Dec. 20, 2018, after Conagra announced lower than expected results for its third quarter 2018 and admitted to the internal problems with Pinnacle, the company’s stock price fell from $29.09 to $20.96 on Dec. 24, 2018. Shares have since rebounded, and closed at $28.91 on August 13.
Dahl is represented by Carl V. Malmstrom of Wolf Haldenstein Adler Freeman & Herz LLC in Chicago and Phillip Kim of The Rosen Law Firm in New York.