A third federal lawsuit was filed by a shareholder against Magellan Health and its Board of Directors and executives Tuesday in connection with the proposed multibillion-dollar sale of Magellan to Centene Corporation. The deal, announced in early January, resulted in lawsuits filed in February. All three cases are filed in the District of Delaware.
The most recent suit centers around the proxy statement recommending that shareholders approve the deal. The statement was issued on Feb. 19, after the other suits were filed. The plaintiffs contended that the statement contains serious errors and omissions.
The complaint describes two areas of information that the defendants allegedly omitted from the proxy statement. First, the plaintiff said the company omitted information as to its financial projections; items at issue include the disclosure of certain line items and allegedly incomplete descriptions of the fairness opinions issued by financial advisors Goldman Sachs and Guggenheim Securities.
Second, the plaintiff alleged that information as to the background of the transaction is missing, specifically referring to the existence of “don’t-ask, don’t waive” (DADW) provisions in confidentiality agreements made between Magellan and potential bidders.
“The failure to disclose the existence of DADW provisions creates the false impression that a potential bidder who entered into a confidentiality agreement could make a superior proposal for Magellan,” the complaint said.
The specific counts brought by the plaintiff are violations of Sections 14(a) and 20(a) of the Exchange Act. The plaintiff shareholder is seeking to enjoin the consummation of the deal until the alleged omissions are rectified. In the event the transaction is completed, the plaintiff is seeking monetary damages under the Exchange Act.
The plaintiff is represented by Long Law.