PRA Health Sciences, Inc., and its Board of Directors received a lawsuit on Friday filed by John Murphy over allegations that the company violated federal securities laws in their proxy statement which gave the details of the company’s impending merger with ICON plc.
PRA Health is a leading global contract research organization whose clients include companies in the biotech and pharmaceutical industries. The company provides their clients with outsourced clinical development and data solution services. On February 24, 2021, ICON announced its merger with PRA health and released that the stockholders of PRA Health would be entitled to $80 in cash and 0.4125 shares of ICON common stock for each share of PRA common stock they previously held.
PRA later filed a proxy statement with the U.S. Securities and Exchange Commission, which the plaintiff claimed is “materially deficient and misleading” due to its failure to disclose the company’s financial projections and analyses, potential conflicts between its financial advisors, and the background leading to its proposed transaction. The plaintiff further contended that the proxy was “designed to convince PRA health’s stockholders to vote in favor of the proposed transaction,” despite the proxy being misleading at best due to its omission of information. Among other flaws, the proxy reportedly left out the adjusted EBITDA for PRA Health and ICON and unlevered free cash flow.
Another set of key information the proxy allegedly ignored is the input and assumptions by the financial advisors regarding their analysis. The plaintiff asserted that, without this, the stockholders are “unable to determine what weight, if any, to place on (financial advisors’) fairness opinions in determining whether to vote in favor of the proposed transaction or seek appraisal.” Rather than the current proxy, the plaintiffs argued that a “full disclosure of omissions,” is required before the public stockholders can make an informed decision.
The defendants were accused of violating multiple parts of the exchange act, as they purportedly were aware of their duty to disclose the necessary information within the proxy, but still failed to do so. At the very least, the plaintiff alleged that PRA Health and ICON were “negligent in filling the proxy.”
Murphy is seeking a new proxy absent of untrue statements that also has all required material statements, a declaration of violations of the Exchange Act, and for the court to “enjoin defendants from conducting the stockholder vote on the Proposed Transaction unless and until the material information” is provided to the stockholders. Alternatively, if the Proposed Transaction is approved, the plaintiff is seeking “to recover damages resulting from the defendants’ violations of the Exchange Act.”
The plaintiff is represented by Weiss Law LLP.
