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Orbital ATK Merger Agreement Proxy Omission of Information Class Action

The board of Orbital ATK, Inc. has entered into a merger agreement to allow Northrop Grumman to buy all outstanding shares of Orbital’s common stock at $134.50 per share. Expected to close in the first half of 2018, the deal, including Orbital’s net debt is valued at about $9.2 billion, but according to the complaint for this class action, a number of things about the deal are troubling.

The class for this action is all owners of Orbital common stock and their successors in interest.

The board filed a Proxy Statement with the Securities and Exchange Commission (SEC) that recommends that shareholders approve the merger but that the complaint alleges is incomplete and misleading.

Orbital’s future prospects: Orbital focuses on flight systems, defense systems, and space systems. One of the thing the Proxy omits, the complaint says, is Orbital’s future prospects if it remained on its own. The complaint notes that the company still has many projects to be completed, which it says portends long-term growth and more demand for its products. It claims that reviews from financial analysts have been good. The complaint also cites the government’s intention to raise military spending as a benefit to Orbital, since at least a third of its customers are part of the armed forces.

Financial projections and analyses: Another thing the Proxy omits, the complaint claims, is full information concerning the financial projections prepared by Orbital’s management and the financial analyses prepared by Citigroup. Since the valuation of the company depends on these things, the complaint alleges that, without full information, shareholders cannot tell if the price offered for the company’s shares reflect the company’s real worth.

Sales process: The complaint alleges that the board “allowed itself to be bulldozed by Northrop Grumman” and that it should have fought for a higher sale price and a lower termination fee, or that it should have conducted more of an auction process. Instead, the complaint claims that the board agreed to “bully” Northrop Grumman’s deal protection devices, including a no-solicitation provision, without providing any basis in the Proxy for these restrictions.

The complaint claims that the omission of information in the Proxy is particularly troubling because the board stands to gain $42 million in various benefits from the merger, through the automatic vesting of restricted shares, performance shares, deferred and phantom stock units, and stock options.

According to the complaint, the omissions from the Proxy are significant and render it false and misleading, in violation of the Securities Exchange Act of 1934, specifically Sections 14(a) and 20(a) and the SEC’s Rule 14a-9.

Article Type: Lawsuit
Topic: Securities

Most Recent Case Event

Orbital ATK Merger Agreement Proxy Omission of Information Complaint

October 11, 2017

The board of Orbital ATK, Inc. has entered into a merger agreement to allow Northrop Grumman to buy all outstanding shares of Orbital’s common stock at $134.50 per share. Expected to close in the first half of 2018, the deal, including Orbital’s net debt is valued at about $9.2 billion, but according to the complaint for this class action, a number of things about the deal are troubling. The board filed a Proxy Statement with the Securities and Exchange Commission (SEC) that recommends that shareholders approve the merger but that the complaint alleges is incomplete and misleading. 

orbital_atk_merger_complaint.pdf

Case Event History

Orbital ATK Merger Agreement Proxy Omission of Information Complaint

October 11, 2017

The board of Orbital ATK, Inc. has entered into a merger agreement to allow Northrop Grumman to buy all outstanding shares of Orbital’s common stock at $134.50 per share. Expected to close in the first half of 2018, the deal, including Orbital’s net debt is valued at about $9.2 billion, but according to the complaint for this class action, a number of things about the deal are troubling. The board filed a Proxy Statement with the Securities and Exchange Commission (SEC) that recommends that shareholders approve the merger but that the complaint alleges is incomplete and misleading. 

orbital_atk_merger_complaint.pdf
Tags: Conflicts of Interest, Mergers or Acquisitions, Proxy Statement, Securities