On Tuesday, an order preliminarily approving class action settlement between the Public Employees’ Retirement System of Mississippi and Treehouse Foods Inc. was filed. This class action was originally brought forth in the Northern District of Illinois, making claims that Treehouse Foods violated multiple sections of the Exchange Act.
The plaintiffs said the violations occurred when, on February 1, 2016, TreeHouse announced that it successfully acquired ConAgra Foods, Inc.’s private brands operations. The company claimed it paid $2.7 billion for the acquisition and stated that “the acquisition of ConAgra’s private brands operations meaningfully expands TreeHouse’s presence in private label dry and refrigerated grocery, and will be called TreeHouse Private Brands.”
In response to this announcement, members of the class said they made significant investments into the brand based on the statements made by them regarding their growth. In the months following this statement, the company allegedly underperformed and their newly hired president resigned after only 6 months. As a result, the stock price fell by nearly 20%, which prompted the affected class to bring suit.
After nearly five years of court proceedings, including 11 months of mediation, the two parties have mutually agreed to accept the Mediator’s proposal to settle the litigation. According to the settlement, “the agreement between the parties included, among other things, the Settling Parties’ agreement to settle and release all claims that were or could have been asserted in the Litigation in return for a cash payment of $27,000,000, for the benefit of the Class, subject to various conditions including the negotiation of the terms of a Stipulation of Settlement and approval by the Court”
Both parties asserted that the Settlement nor any of the terms of this stipulation should be perceived as evidence of any fault; on the contrary, both parties continue to deny any falsities in their arguments. However, the parties believe that “further conduct of the Litigation would be protracted and expensive, and that it is desirable that the Litigation be fully and finally settled in the manner and upon the terms and conditions set forth in this stipulation.”
In regard to the recipients of this settlement, the class is defined as “all persons who purchased TreeHouse common stock on the open market during the Class Period and who were damaged thereby.”