Shareholders File to Block Advisor Group’s Ladenburg Takeover
At least two lawsuits have been filed by shareholders of Ladenburg Thalmann Financial Services to block its pending acquisition by independent broker-dealer Advisor Group.
The suits from Shiva Stein, who is represented by Gloria Kui Melwani, and Harold Bonnikson, represented by Juan Monteverde, seek preliminary and permanent injunctions disrupting the merger until the requested material information is disclosed, according to the complaints.
When Phoenix-based Advisor Group last month announced its plan to buy Miami-based Ladenburg, it estimated the firm’s enterprise value at $1.3 billion—based on its common and preferred stock and outstanding debt—and said it would offer $3.50 a share to Ladenburg shareholders.
The stock, which soared 54% in the week-and-half prior to the announcement after press reports of the deal, has steadied. Shares were changing hands at $3.48 as of early Friday afternoon.
Ladenburg expects the deal to close by March 31, 2020, according to its proxy statement, which said it will not be providing significant retention bonuses to the firm’s 4,400 brokers.
The lawsuits allege that shareholders cannot make informed decisions about approving the merger because of “incomplete and misleading” financial projections in the proxy. Shareholder lawsuits seeking to prop up acquisition prices in M&A transactions are fairly common.
“Defendants have disclosed some of the projections but have omitted the cash flow and net income projections,” Monteverde of Monteverde & Associates in New York, wrote in Bonnikson’s complaint. “These omissions render the summary of projections included in the proxy misleadingly incomplete.”
Ladenburg also omitted information on its total debt as of October 31 and important accounting data and inputs necessary for discounted cash flow analyses, Melwani, who is of counsel at plaintiffs’ firm Wolf Haldenstein, argued on behalf of Stein.
Neither the lawyers nor spokespeople at Ladenburg and Advisor Group returned calls for comment. A spokesman for Reverence Capital—the majority shareholder of Advisor Group—declined to comment.