On Wednesday in the District of Delaware, a shareholder filed a complaint against Magellan Health and the members of its board of directors, alleging violations of the Securities Exchange Act of 1934 in relation to a proposed acquisition of Magellan by Centene Corporation and affiliates.
Health care management services company Magellan announced the proposed merger with Centene, whereafter Magellan would be considered a wholly owned subsidiary of Centene, on Jan. 4, and on Feb. 8, Magellan filed a proxy statement with the Securities and Exchange Commission (SEC) that contained information relevant to stockholders, so they can make an informed decision on whether to vote in favor of it, according to the complaint.
“However, the Proxy Statement misrepresents and/or omits material information that is necessary for the Company’s stockholders to make an informed decision concerning whether to vote in favor of the Proposed Transaction,” the plaintiff argued.
Specifically, the plaintiff claimed that despite the proxy statement being reviewed by each of the individual defendants, as their board positions would require, the statement failed to disclose “critical information regarding, among other things, financial analyses that were prepared by (Magellan financial advisers) Goldman Sachs and Guggenheim and relied upon by the Board in recommending the Company’s stockholders vote in favor of the Proposed Transaction.”
The plaintiff called this alleged failure to provide critical information to stakeholders “at the very least, negligent,” proffering that they could have acquired the knowledge and disseminated it “without extraordinary effort.”
If the alleged omissions and misrepresentations are not remedied before the vote on the proposed transaction, the plaintiff argued, she “will be deprived of her right to cast an informed vote.”
Specifically alleged were violations of Sections 14(a) and 20(a) of the Exchange Act.
The plaintiff requested to enjoin the defendants from going through with the proposed transaction unless the claimed deficiencies are corrected, along with monetary and other relief.
Stein is represented by Rigrodsky & Long.