Dimension Therapeutics Solicitation Statement Omissions Class Action

Dimension Therapeutics focuses on new therapeutic products for people living with rare disease associated with the liver. On October 2, 2017, its board entered into a merger agreement with a company called Ultragenyx. However, the complaint for this class action alleges that the consideration to be paid to stockholders appears inadequate and that the Solicitation Statement filed with the Securities and Exchange Commission (SEC) omits material information that makes it false and misleading.

The class for this action are the public stockholders of Dimension Therapeutics.

The merger agreement described in the complaint seems to attempt to cut off offers of other arrangements for Dimension, or at least make them difficult and expensive. According to the complaint, the agreement forbids the directors, who are individual defendants in this case, from soliciting other merger proposals and limits their ability to talk to other potential buyers.

It also permits the board to withdraw its approval of the merger agreement only under highly restricted conditions, and if they do, it requires Dimension to pay nearly $2,850,000 million to Ultragenix as a termination fee as well as reimburse it for another $2,850,000 that Ultragenyx paid to terminate another merger. Under these conditions, shareholders might want to look carefully at whether they’re getting the best possible deal in the merger with Ultragenyx.

However, the complaint alleges, the Solicitation Statement omits significant information related to Dimension’s financial projections and the analyses performed by MTS Securities, Dimension’s financial advisor. In particular, the complaint says it omits the following:

• For the financial projections, the line items used to calculate such things as EBIT (earnings, interest, taxes), net operating profit after tax, and unlevered free cash flow.
• Also for the financial projections, it does not provide a reconciliation of all non-GAAP to GAPP metrics.
• For MTS’s Discounted Cash Flow Analysis, it does not disclose the inputs and assumptions underlying its range of discount rates.
• For MTS’s Selected Acquisitions Analysis, it does not give the individual multiples and metrics for transactions observed by MTS in the analysis or the company’s net debt as of September 29, 2017.

The complaint alleges that the Solicitation Statement omits information in another very important area: potential conflicts of interest for Dimension’s officers and directors. To be complete, the complaint claims, the Statement would have to disclose the timing and nature of communications about future employment and positions.

According to the complaint, the omission of such pertinent information makes the Solicitation Statement misleading and false, in violation of the Securities Exchange Act of 1934.

Article Type: Lawsuit
Topic: Securities
Tags: Inadequate Share Price, Mergers or Acquisitions, Securities