Shareholders Challenge $1.6 Billion Bid for Gigamon

(CN) - Investors are challenging private equity firm Elliott Management Corp.'s bid for network software company Gigamon Inc. for $1.6 billion over allegedly misleading statements filed with the Securities Exchange Commission.

Filed in the U.S. District Court for Northern California against Gigamon, its directors, and EMC, the class alleges that the defendants violated the Securities Exchange Act by leaving investors in the dark about important financial information related to the deal.

Based in Santa Clara, California, Gigamon creates software used for  network visibility and traffic monitoring.

On October 26, both companies announced the deal where New York-based EMC will pay $38.50 per share for Gigamon, which represents a 7 percent premium to the company's closing price that day.

Gigamon shareholders, however, claim financial projections and valuation analyses performed by the company's advisor, Goldman Sachs, was left out of SEC statements. Without this information, investors say they have no way of knowing how the company may perform in the future or how Goldman Sachs came to its fairness opinion.

"The proxy statement omits material information regarding the background of the proposed transaction. The company's stockholders are entitled to an accurate description of the process  the directors used in coming to their decision to support the proposed transaction," the suit states.

Investors also claim the SEC filing omitted information about potential conflicts of interest facing Gigamon's executive officers, particularly regarding their future employment.

Investors seek to halt the acquisition or an award of rescissory damages if the deal goes through by the expected close in early 2018.

Benjamin Heikali or Faruqi & Faruqi, LLP in Los Angeles represents the class.

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