An Interactive Intelligence Inc. shareholder has sued the Indianapolis-based company and its board members over the firm's forthcoming $1.4 billion sale to another company, claiming that Interactive's value far exceeds the price and that the deal precluded competing offers.
Scott Fischer—an Interactive shareholder from Ellicott City, Maryland—filed the lawsuit in U.S. District Court on Thursday, contesting the call-center software firm's $60.50 per-share acquisition offer from California-based Genesys Telecommunications Laboratories Inc. The all-cash deal was announced Aug. 31 and is slated to close by year's end.
Such suits aren't unusual when public companies are headed for a sale.
The suit seeks class-action status. It asks the court to enjoin the acquisition until the company adopts a process to "obtain a merger agreement providing the best possible terms for [shareholders]," and until the company "discloses the material information" that had been omitted from securities filings related to deal.
"The proposed transaction is the product of a flawed process .. ," the suit said. "Compounding the unfairness of the [transaction], defendants issued materially incomplete and misleading disclosures" in securities filings in September.
Fischer purchased 17 Interactive shares on Aug. 11 for $57.92 each, the lawsuit said, though it's unclear if he held other shares. Genesys' $60.50 per-share offer represents a 4.5 percent premium over that price.
Attorneys with Connecticut-based Levi & Korinsky LLP, who represent Fischer, did not return calls seeking comment. An Interactive Intelligence spokesperson said the company does not comment on pending or active litigation.
The lawsuit outlined the play-by-play of the eventual deal with Genesys, which took root in 2012.
It then claimed that Interactive, in its deal with Genesys, agreed to provisions that all but ensured Genesys would be the winning bidder—including restrictions on soliciting other offers and a $43 million termination fee payable to Genesys if Interactive backed out.
"By agreeing to all of the deal protection devices," the suit said, Interactive board members "locked up the proposed transaction and precluded other bidders from making successful competing offers for the company."
Beyond that, the suit claimed, Interactive failed to disclose executive financial projections, including free cash flow estimates, in a Sept. 20 securities filing related to the deal.
"Stockholders are entitled to know about the company's promising future financial prospects before being asked to vote on the proposed transaction," the suit said.
"This is particularly true when the stockholders will be cashed out of the company, because unlike a stock transaction, the stockholders will have no participation in the success of the future combined companies."