Oclaro, Inc. ("Oclaro") designs, manufactures, and markets optical components, modules, and subsystems for the long-haul, metro, and data center markets worldwide.
According to the Complaint, the terms of the Proposed Transaction were memorialized in a March 12, 2018, filing with the Securities and Exchange Commission (“SEC”) on Form 8-K attaching the definitive Agreement and Plan of Merger (the “Merger Agreement”). Under the terms of the Merger Agreement, Oclaro will become an indirect wholly-owned subsidiary of Lumentum, and Oclaro shareholders will receive a mix of cash and stock totaling $5.60 in cash and 0.0636 shares of Lumentum common stock for each share of Oclaro common stock they own. At the time of the signing of the Merger Agreement, Lumentum shares were trading for $68.98, resulting in an approximate valuation of Oclaro shares at $9.99 per share. Thereafter, on May 17, 2018, Lumentum filed a Registration Statement on Schedule S-4 (the “S-4”) with the Securities and Exchange Commission (the “SEC”) in support of the Proposed Transaction.
The Complaint alleges the Proposed Transaction is unfair and undervalued for a number of reasons. Significantly, the S-4 describes an insufficient sales process in which the Board only paid lip service to its fiduciary duties by creating a special committee of the Board to serve as an “M&A Committee”. However, the S-4 reveals that the M&A Committee was inherently flawed as Defendant, the Company CEO, and an inside Director, who stands to receive tens of millions of dollars upon the consummation of the Proposed Transaction, was selected to sit on the committee.