A Southern District of New York complaint filed Thursday takes issue with an all-cash transaction valued at $19.7 billion because Nuance Communication Inc. and Microsoft. The complaint centers on Nuance’s Securities and Exchange Commission (SEC) filing, which allegedly fails to adequately disclose information investors need to know in advance of the shareholder vote. The filing names the publicly traded company, its board of directors, and several of its executives as defendants.
Shareholder-plaintiff Susan Finger explains that Nuance is a “technology pioneer and market leader in conversational artificial intelligence AI and ambient clinical intelligence.” In the companies’ April 12 announcement of the deal, reprinted in the complaint, Microsoft CEO Satya Nadella stated that “[t]ogether, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud for Healthcare and Nuance.” The announcement explains that the parties expect the deal to close by the end of the year, pending a successful stockholder vote.
The plaintiff claims that Nuance’s May 17-filed proxy statement omits or misrepresents material information concerning the proposed deal. Specifically, the plaintiff asserts that it omits information underlying financial projections, including the unlevered free cash flows and other inputs and assumptions Nuance’s financial advisor Evercore Group L.L.C. relied on in several of its analyses.
Additionally, the proxy statement fails to disclose material information relating to Evercore’s potential conflicts of interest, the complaint claims. For example, the plaintiff argues that the SEC filing does not disclose “the nature of the services Evercore performed for the Company and its affiliates during the two-year period prior to the date of its opinion.”
The complainant asks that the court halt the merger until a corrective and complete proxy statement is filed. Engel Law PLLC represents the plaintiff.