GW Pharmaceuticals Hit With Securities Complaint After Merger Announcement

On Thursday, a shareholder filed suit against GW Pharmaceuticals PLC and the members of the company’s board of directors in connection with the proposed acquisition of GW by Jazz Pharmaceuticals PLC and its subsidiary, Jazz Pharmaceuticals UK Holdings Limited (together, Jazz). The proposed merger will create an “‘innovative, high-growth, global biopharma leader,’” according to GW’s Feb. 3 press release quoted in Thursday’s complaint.

According to the Southern District of New York filing, English and Welsh GW “discovers, develops, manufactures, and commercializes novel, regulatory approved therapeutics from its proprietary cannabinoid product platform to address a broad range of diseases.” Jazz is reportedly a global biopharmaceutical company based in Ireland that focuses on medicines that treat neuroscientific and oncological conditions. Both companies’ shares reportedly trade on the Nasdaq stock exchange.

The complaint explains that GW’s proxy statement contains materially incomplete and misleading information concerning the merger. Allegedly, in order for GW stockholders to properly determine how to vote their shares in the upcoming Apr. 23 shareholder vote on the proposed merger, they need information that the current proxy lacks.

Specifically, the shareholder takes issue with the GW’s financial projections, the fairness opinion and financial analyses performed by the defendant’s financial advisors, and the board of directors’ interests in the proposed merger as well as steps taken to isolate potential conflicts. Further, the plaintiff claims that the proposed deal, “[p]iggybacking off the Pandemic, … provides a substantial discount to Jazz, at the expense of the common stockholders who will not see the intrinsic value of their shares realized nor be able to fully partake in the continued growth of the Company.”

Thus, the complaint seeks to enjoin GW from taking any steps to consummate the deal, unless and until the information is disclosed to stockholders sufficiently in advance of the upcoming vote. In the alternative, and should the merger go through, the plaintiff wishes to recover damages resulting from the defendants’ alleged misconduct.

The plaintiff is represented by Monteverde & Associates PC and of counsel Kahn Swick & Foti LLC.