A suit was filed on Wednesday in the Southern District of New York by plaintiff Jeffrey D. Justice II against defendants Castlight Health, Inc. as well as the company’s Board of Directors, Vera Whole Health Inc., and Carbon Merger Sub, Inc. The complaint followed the defendant’s announcement of a proposed transaction in which they will be acquired by Vera Whole Health, Inc. and Carbon Merger Sub, Inc.
The suit follows a similar case filed earlier this week, brought by a different plaintiff and cousnel.
The aforementioned announcement was made on January 4 by the Castlight Board of Directors. As part of the agreement, Carbon will acquire all of Castlight’s outstanding common stock for $2.05 per share. The proposed transaction announcement was followed by a solicitation/recommendation statement on January 19, which Castlight filed with the Securities and Exchange Commission.
Justice filed suit against the defendants after reading the financial projections included in the solicitation statement, which he claims do not disclose “all line items used to calculate the projections; and a reconciliation of all non-GAAP to GAAP metrics.” Justice also details that many of the issues with the solicitation statement involve Castlight’s financial advisor’s analyses, which allegedly do not include a host of things, including the individual multiples and metrics for the companies, the projected future free cash flows used in the analysis and all underlying line items, the terminal values of the Company, and much more.
The plaintiff argues that the omitted material information is integral to the statement because it “provides stockholders with a basis to project the future financial performance of a company, and allows stockholders to better understand the financial analyses performed by the company’s financial advisor in support of its fairness opinion.” Justice asserts that the defendants filed the inadequate solicitation statement “knowingly or with deliberate recklessness,” as they were aware of their responsibility to provide the necessary financial information for their shareholders.
Justice’s complaint cites three separate violations of the Securities Exchange Act of 1934. As a result of these alleged violations, Justice is seeking an injunction preventing the defendants from closing the proposed transaction, and in the event it is closed, rescinding it or awarding rescissory damages, direction requiring the defendant to file an amended solicitation statement, favorable judgement on the violations, litigation fees, and any other relief deemed proper by the Court.The plaintiff is represented by Rigrodsky Law.
