On Sunday, Charles Woolard, a stockholder, filed a complaint in the Southern District of New York against TherapeuticsMD, Inc. and its executives for allegedly violating the Securities Exchange Act for deceiving their shareholders into supporting a merger with EW Healthcare Partners.
TherapeuticsMD, referred to as TXMD, is a women’s healthcare company with three leading products. The company was removed from the Nasdaq exchange for their share prices falling below $1, the complaint explained. In February 2022, EW Healthcare Partners agreed to buy all outstanding shares of the company for $18 each, outbidding another party to secure a deal.
Throughout the months, TXMD was added back to the Nasdaq at $7.97 per share, but on May 19 their shares dropped to $2.27. EWHP then revised their offer to buy all shares for $10 each. Though allegedly TXMD tried to counteroffer, their lending company agreed that the price was fair and the Board unanimously approved the offer.
When TXMD released the Recommendation Statement to its shareholders, they failed to mention that another bidder offered $12 a share, nor did it supply any details about this party, the complaint said.. The recommendation “failed to disclose” the financial forecasts made by the companies and did not include the fairness opinion by TXMD’s financial advisor which makes the Recommendation Statement “misleading.”
Because of TXMD’s purportedly misleading actions, the plaintiff is suing for violations of Section 14(d), 14(e) and 20(a) of the Exchange Act as he, and other shareholders, will false irreparable harm if the merger is allowed to proceed. Woolard claimed that the defendants “knowingly or recklessly omitted material facts” in order to “induce TXMD Stockholders to tender their shares in the Tender Offer” in order to maximize their gains as they could convert “their illiquid TXMD equity holdings into cash through the immediate sale of all of their TXMD shares for cash.”
The plaintiff is seeking injunctive relief enjoining TherapeuticsMD from proceeding with the merger and to correct any false and misleading statements in the Recommendation Statement, rescissory damages, costs and disbursements, attorney’s fees and costs, and other relief.
The plaintiff is represented by Wohl & Fruchter LLP.
