Merger Unfair, Shareholder Suit Protests

A shareholder seeks to halt the proposed merger of Inc. and Slack Technologies Inc. arguing that the contract and supporting U.S. Securities Exchange Commission (SEC) filings are flawed. Under the agreement, Slack shareholders are set to receive both cash and fractions of Salesforce shares, the companies announced Dec. 1, 2020.

The shareholder’s complaint first takes issue with the compensation figure, arguing that Slack’s intrinsic value exceeds the amount its stockholders will receive, approximately 0.0776 shares of Salesforce common stock and $26.79 in cash per share. The shareholder next contends that the proposed agreement contains a “no solicitation” clause that prevents Slack from “soliciting alternative proposals and constraints (sic) its ability to negotiate with potential buyers.”

The proposed agreement also penalizes Slack for terminating the deal in favor of better offers under certain conditions, the plaintiff claims. The $9 million termination fee is “excessive and unduly restrictive to Slack’s ability to consider other offers,” the filing argues.

Much of the complaint is dedicated to describing the shortcomings of the companies’ SEC registration statement. In particular, the shareholder argues that it omits material information rendering it false and misleading.

First, the plaintiff claims that the registration statement fails to adequately disclose information regarding the companies’ financial projections. Second, the shareholder argues that the analyses performed by the company’s financial advisors, Qatalyst Partners LP and Goldman Sachs & Co. LLC, are dissatisfactory. In particular, the plaintiff points to exclusions and disclosures omitted in the financial advisers’ cash flow, “premia,” share value, and “selected companies” analyses.

The plaintiff seeks an order preliminarily and permanently enjoining the transaction, directing the companies to resubmit an adequate a registration statement, and awarding the plaintiff her costs. The instant suit follows another filed in late December 2020 similarly contending that the companies did not disclose information needed to accurately assess the proposed transaction.

The shareholder is represented by Moore Kuehn PLLC.