According to the law firm press release, on April 11, 2016, the Company announced it had entered into an Agreement and Plan of Merger ("Merger Agreement") under which Annaly would acquire all of the outstanding shares of Hatteras through a tender offer (the "Tender Offer"). Following the Tender Offer, if more than two-thirds of the outstanding Hatteras common stock (including Hatteras shares owned by Annaly and its subsidiaries) had been tendered, Hatteras would be merged with and into an Annaly subsidiary in a "second-step" merger under the Maryland General Corporation Law, which would permit completion of the Merger without a shareholder vote if Annaly acquired the minimum two-thirds of Hatteras outstanding stock.
Pursuant to the terms of the Merger Agreement, which was unanimously approved by the Board, Hatteras shareholders could choose one of the following considerations: (1) $5.55 in cash and 0.9894 shares of Annaly common stock; (2) $15.85 in cash; or (3) 1.5226 shares of Annaly common stock. The complaint points out that, although Defendants touted that the Offer Price represented a premium of about 24% percent to the Company's 60-day volume-weighted average price of Hatteras' stock, Hatteras stock was trading over the consideration six months prior and was reaching a high of over $18.00 for nearly all of 2015.
The complaint alleges that the Schedule 14D-9 Solicitation/Recommendation Statement ("14d-9") filed with the Securities and Exchange Commission ("SEC") on May 5, 2016 provided materially incomplete and misleading information about the Company and the Proposed Transaction, in violation of Sections 14(d)(4), 14(e), and 20(a) of the Exchange Act. The 14d-9 failed to provide Hatteras' shareholders with material information concerning the financial and procedural fairness of the Proposed Transaction.