(CN) – Mass-media company Gannett Co. Inc. is set to be bought by New Media Investment Group creating a dominant force in print and digital news, but a class action lawsuit seeks to block the deal alleging that crucial information was withheld from investors in statements filed with the U.S. Securities Exchange Commission.
According to the lawsuit filed in Delaware, the transaction was announced on August 5, 2019, where Gannett investors will receive $6.25 in cash and 0.5427 of a share of parent stock for each Gannett common stock they own. Virginia-based Gannett is the owner of USA Today Network and more than 100 media brands.
The lawsuit names both companies and directors and executive officers for Gannett as defendants, accusing them of filing a registration statement with the SEC that omits information about financial projections for both Gannett and New Media, the analyses performed by the companies’ financial advisors, as well as potential conflicts of interest involving the advisors.
“The disclosure of projected financial information is material because it provides stockholders with a basis to project the future financial performance of a company, and allows stockholders to better understand the financial analyses performed by the company’s financial advisor in support of its fairness opinion,” the complaint states.
The merger agreement contains a “no-solicitation” provision prohibiting Gannett from soliciting alternative offers, a matching provision in case of a superior offer made to Gannett, and a $45 million termination fee.
Shareholders seek to stop the acquisition and an order compelling defendants to issue an accurate registration statement, or rescissory damages if the deal goes through.
Investors are represented by Brian D. Long and Gina M. Serra of Rigrodsky & Long, P.A. in Wilmington, Del.
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