Verifone’s Go-Private Deal Falls Flat for Shareholders, Class Claims

(CN) – Verifone Systems’ plan to take the company private in a deal valued at $3.4 billion spurred a class action brought by investors who claim Verifone’s prospects for future growth are unaccounted for in the valuation.

The lawsuit, filed in the U.S. District Court for the Northern District of California, names several of Verifone’s board members as defendants alleging they made the deal with private equity firm Francisco Partners while withholding material information from the Securities Exchange Commission and investors.

According to the complaint, an investor group led by Francisco Partners including British Columbia Investment Management Corporation, will acquire Verifone for $23.04 per share in cash. The deal “as currently contemplated” is unfair, shareholders claim, because  Verifone’s stock traded as high as $21.31 on Sept. 12, 2017 and $18.47 on March 9, 2018.

“Further, the company has showed prospects for future growth. In particular, the company has reported double-digit growth in sales since 2014, positive growth in EBITA since 2015, and positive net income in 2016,” the suit states.

On May 7, Verifone filed a proxy statement soliciting investors to vote in favour of the deal.  The filing allegedly omitted information about the process leading up to the deal. Financial projections developed by Verifone’s management are imperative in helping investors decide how to vote, the class claims.

The transaction is expected to close in the third quarter of this year, and investors seek to halt the deal until all relevant information is disclosed.

Investors are represented by Adam T. Hoover of Reich Radcliffe & Hoover LLP and Joshua M. Lifshitz of Lifshitz & Miller LLP.

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