On Tuesday, a shareholder filed a complaint in the Southern District of New York against Pluralsight, a “leading cloud-based technology skills development platform,” and its Board of Directors for purported securities violations regarding the proposed sale of the company to a private equity firm.
According to the complaint, on December 13, 2020 Pluralsight announced that it entered into a Merger Agreement with Vista Equity Partners Management, LLC, through affiliates which include Lake Holdings, Lake Guarantor, Lake Merger Sub I, and Lake Merger Sub II, for the sale of the company to Vista. Pursuant to the terms of the merger agreement, Pluralsight shareholders would receive $20.26 in cash per Pluralsight share as Merger Consideration.
The plaintiff alleged, however, that on January 19, 2021 in an effort to convince shareholders to support the transaction “the Board authorized the filing of a materially incomplete and misleading proxy statement” with the Securities and Exchange Commission (SEC). The plaintiff asserted that the defendants were obligated to carefully review the Proxy Statement and make sure there were no omissions or misleading statements, which they allegedly failed to do breaching securities laws. The plaintiff averred that the Proxy Statement contains misrepresentations or omissions necessary for shareholders to make an informed vote.
In particular, the plaintiff proffered that the filing contains false or misleading statements relating to Pluralsight’s financial projections, including the “disclosure of non-GAAP projections,” which according to the SEC “can be inherently misleading.” The plaintiff stated that Pluralsight must “disclose the line item projections for the financial metrics that were used to calculate the non-GAAP measures.” The Proxy Statement also allegedly contains false or misleading statements relating to financial analysis and opinion, including failing to disclose various figures, values, assumptions, and rationale used in its analyses and opinion.
The defendants are accused of violating Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 14a-9 promulgated thereunder for the aforementioned conduct.
The plaintiff sought to enjoin the defendants from taking steps to consummate the proposed transaction unless the material information is disclosed to shareholders before the shareholders vote on the Proposed Transaction, or, in the alternative, if the Proposed Transaction is consummated to recover damages from the defendants’ alleged violations. Additionally, the plaintiff has sought an award for damages, for the defendants to amend the Proxy Statement to remedy the required material facts, and for other costs and fees.
The plaintiff is represented by Lifshitz Law Firm, P.C.
