Stockholder Peter Stein has filed a class action complaint against Adesto Technologies for violating the Securities Exchange Act of 1934. The complaint was filed in the New York Southern District Court. Plaintiff Stein is represented by Faruqi & Faruqi.
Stein alleges that Adesto has violated the Securities Exchange Act of 1934 because of a proposed merger between Adesto and Dialog Semiconductor. Adesto’s Board entered an agreement and merger plan with Dialog on February 20. As part of the agreement, Adesto shareholders would receive $12.55 in cash for each share they own. Stein alleges that on March 16, in an effort to convince shareholders to vote for the proposed merger, “the Board authorized the filing of a materially incomplete and misleading Form PREM14A Preliminary Proxy Statement (the ‘Preliminary Proxy’) with the Securities and Exchange Commission (‘SEC’), in violation of Sections 14(a) and 20(a) of the Exchange Act.”
Shareholders are scheduled to vote on the proposed merger on May 5. The plaintiff states that shareholders cannot fairly assess the proposed merger because the defendants have not disclosed certain information necessary for consideration. As a result, the provided statements and documents are allegedly “materially incomplete and misleading.” Specifically, the Proxy Statement “contains materially incomplete and misleading information concerning: (i) the financial projections for the Company that were prepared by the Company and relied on by Defendants in recommending that Adesto shareholders vote in favor of the Proposed Transaction; and (ii) the summary of certain valuation analyses conducted by Adesto’s financial advisor, Cowen and Company, LLC. (“Cowen”) in support of its opinion that the Merger Consideration is fair to shareholders, on which the Board relied.” Stein says that the omitted information must be disclosed before the shareholder vote.
The questions pertaining to the proposed Class are: “whether Defendants disclosed material information that includes non-GAAP financial measures without providing a reconciliation of the same non-GAAP financial measures to their most directly comparable GAAP equivalent in violation of Section 14(a) of the Exchange Act”; “whether Defendants have misrepresented or omitted material information concerning the Proposed Transaction in the Proxy in violation of Section 14(a) of the Exchange Act”; “whether the Individual Defendants have violated Section 20(a) of the Exchange Act”; and “whether Plaintiff and other members of the Class will suffer irreparable harm if compelled to vote their shares regarding the Proposed Transaction based on the materially incomplete and misleading Proxy.”
The proposed transaction would combine Adesto, which provides custom integrated circuits and embedded systems for the Industrial Internet of Things and Dialog, which provides “power management, charging, AC/DC power conversion, Wi-Fi and Bluetooth low energy technology.” Stein states that Adesto is “well-positioned for financial growth and the Merger Consideration fails to adequately compensate the Company’s shareholders.” According to Stein, the omitted information must be revealed so shareholders can assess how fair the proposed merger is and how they should vote. He adds that if this information is not disclosed prior to voting, he and the Class will have suffered economic harm.
The plaintiff alleged that the proxy statement is materially incomplete and misleading as to financial projections. These projections do not give shareholders a complete understanding of the assumptions and factors used to create the projections, including the use or non-use of Generally Accepted Accounting Principles (GAAP) standards; The plaintiff alleges this constitutes a violation Regulation G and SEC Rule 14a-9. In order to comply, Adesto “must provide a reconciliation of the non-GAAP financial measures to their respective most comparable GAAP financial measures.”
Stein has sought to certify the Class and himself as Class Representative and his counsel as Class Counsel, to enjoin Adesto from proceeding with the shareholder vote or completing the merger until omitted information is disclosed, an award for damages, costs and fees, and other relief as determined by the court.