Glu Mobile Sued for Securities Violation Regarding EA’s Proposed Acquisition

On Monday, a stockholder filed a complaint in the District of Delaware against mobile game developer Glu Mobile Inc. and members of its Board of Directors regarding the proposed transaction in which Glu Mobile would be acquired by video game company Electronic Arts Inc.  and Giants Acquisition Sub Inc. The complaint alleged that the defendants omitted material information in the Proxy Statement regarding the acquisition.

Glu Mobile makes games such as Covet Fashion, Diner DASH Adventures, Kim Kardashian: Hollywood, and MLB Tap Sports Baseball. According to the complaint, on February 8, 2021, the Glu Mobile board decided to enter into a Merger Agreement with Electronic Arts pursuant to which Glu Mobile’s stockholders would receive $12.50 in cash for each share of Glu Mobile common stock that they owned. 

The complaint noted that on March 12, 2021, the defendants filed a Proxy Statement with the Securities and Exchange Commission for the proposed deal. However, the plaintiff alleged that the Proxy Statement “omits material information with respect to the Proposed Transaction, which renders the Proxy Statement false and misleading.”

Specifically, the plaintiff averred that the Proxy Statement omits material information regarding Glu Mobile’s financial projection because for each set of financial projections the Proxy Statement allegedly fails to disclose “all line items used to calculate bookings and adjusted (earnings before interest, taxes, depreciation, and authorization); and a reconciliation of all non-GAAP to GAAP metrics.” 

The plaintiff contended that this information is important for stockholders to know “because it provides stockholders to project the future financial performance of a company, and allows stockholders to better understand the financial analyses performed by the company’s financial advisor in support of its fairness opinion.” 

Allegedly the Proxy Statement also omits material information in regards to “the analyses performed by the Company’s financial advisors, Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC.,” including various values, inputs, and assumptions. The plaintiff noted that the Proxy Statement also failed to disclose the terms of Glu Mobile’s additional financial advisor’s, UBS Securities LLC, engagement. 

The defendants were accused of violating Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and the act’s Rule 14a-9.

The plaintiff seeks to preliminarily and permanently enjoin the defendants from proceeding with, consummating, or closing the Proposed Transaction, or if the Proposed Transaction is consummated to rescind it or award rescissory damages; for the defendants to disseminate a Proxy Statement without any omissions, misstatements, or false or misleading statements; declaratory judgment in the plaintiff’s favor; and an award for costs and fees.

The plaintiff is represented by Rigrodsky Law P.A.