fbpx

Omega Protein Merger Proxy Insufficient Information Securities Class Action

The Omega Protein Corporation announced a proposed merger transaction with Cooke, Inc. on October 6, 2017, under which Cooke would pay $22 per share of Omega stock. But the complaint for this class action claims that the Preliminary Proxy Statement Omega has submitted to the Securities and Exchange Commission (SEC) doesn’t contain enough information to allow shareholders to fairly assess the transaction.

The class for this action is all public stockholders of Omega Protein Corporation.

Omega makes nutritional products that are meant to “improve the nutritional integrity of foods, dietary supplements, and animal feeds.” The company has two primary segments, animal nutrition and human nutrition.

Animal nutrition has two subsidiaries: Omega Protein, which harvests and processes a type of fish called menhaden, and Omega Shipyard, a dry-dock facility to maintain Omega Protein’s fleet of ships. Human nutrition has three main subsidiaries: Bioriginal Food & Science, Wisconsin Specialty Protein, and Cyvex Nutrition.

The complaint claims that the Proxy does not provide enough information in three areas.

First, the complaint says it omits information about the analyses prepared by financial advisor JP Morgan Securities. The complaint alleges that, while the Proxy includes some financial analyses, it does not include some of those JP Morgan actually used in its fairness opinion. For example, it claims that JP Morgan’s Discounted Cash Flow Analysis fails to show (1) projected unlevered free cash flows for 2017 to 2026, (2) inputs and assumptions underlying its discount rate range, and (3) the terminal exit multiples implied by the analysis.

Also, the complaint claims that the Proxy does not show the individual multiples and financial metrics for companies and transactions in, respectively, its Public Trading Multiples Analysis and Selected Transaction Analysis. Without more complete information, the complaint alleges, shareholders cannot evaluate JP Morgan’s opinion that the compensation offered is fair.

Second, before Omega decided on the proposed merger transaction, the complaint alleges, Omega considered three possible transactions: the sale of the entire company, a sale of the Bioriginal and Cyvex subsidiaries, and a sale of the company’s Wisconsin Specialty Protein subsidiary. The complaint claims that more information is needed about the “numerous acquisition offers” the company received for these various options before shareholders can decide whether the best choice was made.

Third, while the Proxy Statement mentions that “Omega has amended the employment agreement” with various executive officers, the complaint alleges that it does not disclose enough about the timing and nature of the discussions leading up to the changes, which means that shareholders cannot judge potential conflicts of interest.

These omissions, the complaint claims, violate Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and make the Proxy false and misleading.  

Article Type: Lawsuit
Topic: Securities

Most Recent Case Event

Omega Protein Merger Proxy Insufficient Information Securities Complaint

November 6, 2017

The Omega Protein Corporation announced a proposed merger transaction with Cooke, Inc. on October 6, 2017, under which Cooke would pay $22 per share of Omega stock. But the complaint for this class action claims that the Preliminary Proxy Statement Omega has submitted to the Securities and Exchange Commission (SEC) doesn’t contain enough information to allow shareholders to fairly assess the transaction. The complaint claims that insufficient information is given in three areas, (1) the figures and assumptions used in arriving at various projections and opinions contained in the Proxy, (2) the other deals that were considered before Omega decided on the proposed transaction, and (3) the potential conflicts of interest of the officers of the company.

omega_protein_sec_compl.pdf

Case Event History

Omega Protein Merger Proxy Insufficient Information Securities Complaint

November 6, 2017

The Omega Protein Corporation announced a proposed merger transaction with Cooke, Inc. on October 6, 2017, under which Cooke would pay $22 per share of Omega stock. But the complaint for this class action claims that the Preliminary Proxy Statement Omega has submitted to the Securities and Exchange Commission (SEC) doesn’t contain enough information to allow shareholders to fairly assess the transaction. The complaint claims that insufficient information is given in three areas, (1) the figures and assumptions used in arriving at various projections and opinions contained in the Proxy, (2) the other deals that were considered before Omega decided on the proposed transaction, and (3) the potential conflicts of interest of the officers of the company.

omega_protein_sec_compl.pdf
Tags: Mergers or Acquisitions, Providing False or Misleading Information, Proxy Statement, Securities