The Kind Of Lawsuits That Emerge Post-Merger When Merger Was Not Successful

The Kind Of Lawsuits That Emerge Post-Merger When Merger Was Not Successful

Much has been written recently (including on this blog) about the growing prevalence of M&A related litigation. These lawsuits, typically launched by the target company shareholders, are filed shortly after a merger announcement and usually object to some aspect of the proposed merger or of the merger-related disclosure. But the merger objection lawsuit is not the only kind of lawsuit that mergers can produce - there is also the kind of lawsuit that can arise post-merger when, it is alleged, the merger was not successful.

In a recent example of this second kind of merger lawsuit, on May 2, 2012, plaintiffs filed a shareholder class action lawsuit in the Northern District of Illinois against Allscripts Healthcare Solutions and two of its officers. Allscripts is, according to the complaint, the "corporate result" of the merger of Allscripts-Misys Healthcare Solutions and Eclipsys Corporation, which was announced on June 9, 2010.

The complaint references the company's April 26, 2012, filing on Form 8-K (here), in which the company "shocked the market" by reporting earnings sharply lower than guidance, as well as the termination of the Chairman of the company's board of directors; the resignations of three other directors; and the resignation of the company's CFO. According to the 8-K, the termination and resignations followed board discussions regarding the leadership of the company. The complaint alleges that in reaction to the news the company's share price dropped sharply.

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Read other items of interest from the world of directors & officers liability, with occasional commentary, at the D&O Diary, a blog by Kevin LaCroix.

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