According to a complaint filed July 18, 2011, the plaintiffs charge violations of Sections 10(b) and 20(a) of the Exchange Act in a proposed merger agreement.
On January 10, 2011, the company and bidder announced a definitive agreement, pursuant to which the bidder will acquire all of the outstanding shares of the company in an all-stock transaction whereby the company’s stockholders will receive 2.6125 shares of the bidder’s common stock in exchange for each share of the company’s common stock. Based on the bidder’s closing share price on January 7, 2011, the day before defendants signed the January 8, 2011 merger agreement, the company’s shareholders would receive a value of $46.48 per share for the Company.
The plaintiffs allege that the board members who approved the merger agreement stood to receive post-closing employment with the combined company and other lucrative financial benefits that are not being equally shared by the company's stockholders.
The board entered into the Proposed Transaction at a time when the Company was reporting consecutive quarters of strong financial results and growth. Further, the complaint states that the defendants entered into the proposed transaction without making any attempt whatsoever to shop the Company or solicit other bidders to adequately inform itself of whether the price being offered by the bidder was the best price reasonably attainable for the company's shareholders.
Plaintiffs further claim that in July 2010, the board inexplicably terminated discussions with Company A, less than one month after receiving an offer from Company A for an undisclosed premium, in favor of the bidder and before any terms or potential benefits of a merger with the bidder were even discussed. The board also refused to engage in any meaningful discussions with Company B. Moreover, plaintiffs believe that the unwillingness to shop the company hid the fact that the company was for sale, and therefore, Company C was unaware of the opportunity to submit a competing bid until news about the merger leaked out in early January 2011. Company C moved quickly to inform the Board of its interest in acquiring Progress, but was rejected outright.
The complaint charges that the board breached its fiduciary duties by failing to give any meaningful consideration to the offers and overtures from these other bidders or use their interest to create a competitive bidding process or even conduct any kind of pre or post merger "market check". Further, the complaint alleges that the proposed consideration was inadequate and does not fully take into account the company's strong performance and prospects for continued growth.
Lastly, the complaint alleges violations of violated Section 14(a) of the Exchange Act and breached their fiduciary duties by issuing misleading statements and omitting material information in connection with the Registration Statement. Specifically, the Registration Statement failed to provide the company's shareholders with material information and provides them with materially misleading information concerning, inter alia, the defective sales process, the financial analyses performed by the company’s and bidder's financial advisors and the conflicts of the bankers providing fairness opinions in connection with the Proposed Transaction.
On December 08, 2011, the plaintiff filed a Notice of Voluntary Dismissal thereby dismissing the case.