(CN) – Diebold Nixdorf and two of its top officers face a shareholder class action for allegedly withholding information about the company’s business operations as well as disseminating misleading statements that preceded a 23 percent drop in Diebold shares last year.
Lead plaintiff City of Dearborn Heights Act 345 Police and Fire Retirement System filed suit in the U.S. District Court for Southern New York against Diebold, CEO Andreas Walter Mattes and CFO Christoper A. Chapman on behalf of investors who purchased the company’s shares between Feb. 14, 2017 and July 4, 2017.
According to the lawsuit, Diebold’s customers include “nearly all of the world’s top 100 financial institutions and a majority of the top 25 global retailers.” In 2016, Diebold, Inc. acquired German competitor Wincor Nixdorf AG, thereafter becoming Diebold Nixdorf.
The lawsuit alleges that during the five-month class period, the company was less focused on its core business due to the Wincor acquisition while knowing there would be fewer contract renewals, and that the company was not properly prepared to staff service technicians. The lawsuit further alleges that the defendants were aware that fewer contracts would lead to a shortage of adequately trained technicians and that as a result, Diebold would “suffer margin pressure in its services segment” and lose market share.
But the defendants allegedly issued positive statements until July 5, 2017, when Diebold announced it would be lowering its expected revenue for 2017 from $5-$5.1 billion to $4.7-$4.8 billion.
The announcement caused Diebold shares to drop $6.28 per share, closing at $21.20 that same day. The lowered guidance was attributed to “longer customer decision-making process and order-to-revenue conversion cycle” and a “delay in systems rollouts,” in a press release.
Lesley F. Portnoy of Glancy Prongay & Murray LLP in New York, with Peter A. Binkow, Robert V. Prongay and Pavithra Rajesh in Los Angeles; E. Powell Miller in Rochester, Mich.; Michael J. VanOverbeke and Thomas C. Michaud of VanOverbeke Michaud and Timmony P.C. in Detroit.