Shareholder Anthony Franchi sued GenMark Diagnostics Inc. and the members of its board of directors for violations of the Securities Exchange Act of 1934 on Monday. The District of Delaware complaint seeks to enjoin the expiration of a tender offer, pursuant to which GenMark will be acquired by Roche Holdings Inc. through Roche’s wholly-owned subsidiary Geronimo Acquisition Corp.
According to the filing, and the companies’ March 15 announcement reprinted therein, the acquisition of GenMark’s “syndromic panel testing portfolio will complement Roche’s current molecular diagnostics portfolio and the Roche global network will enable expanded reach for GenMark’s products.” The acquisition is reportedly worth $1.8 billion.
Under the tender offer, which is set to expire on April 21, Roche will acquire all outstanding GenMark common stock shares for $24.05 each. In connection with the acquisition, GenMark filed a recommendation statement with the Securities Exchange Commission recommending that its shareholders approve the transaction.
The complaint claimed that the statement is defective in several ways. First, it omitted or misrepresented financial projections, data, and inputs that underlie the financial valuation, and in turn, fairness opinion supplied by GenMark’s financial advisor J.P. Morgan Securities LLC. In particular, the statement reportedly left out material information about financial forecasts from 2021 through 2030. In addition, and among other things, the analysis performed by J.P. Morgan lacks transparency, the plaintiff argued.
Second, the recommendation allegedly failed to adequately inform shareholders about background information leading up to the acquisition. Specifically, the filing did not explain whether provisions were in place to prevent GenMark from receiving higher competing bids, the complaint purported.
Third, the complainant asserted that the statement does not include enough detail about high-ranking employees’ potential conflicts of interest. It is reportedly void of information regarding post-acquisition employment and merger-related benefits for GenMark officers and directors, the shareholder claimed.
Collectively, the complaint asserted, these flaws render GenMark shareholders unable to determine whether the proposed transaction is fair. In turn, the plaintiff sought to enjoin the merger, and in the event that the deal is consummated, requests rescissionary damages. In either case, the shareholder asked for an award of his attorneys’ fees and costs.
The plaintiff is represented by Long Law LLC.