Date Set for Valassis Suit Against Advo
Dec. 11 is the court date for Valassis Communications' lawsuit seeking to rescind its merger agreement with direct mailer Advo based on allegations of fraud and material adverse changes.
Coupon giant Valassis, Livonia, MI, alleges that Advo's management materially misrepresented the company's financial health and failed to reveal internal control deficiencies. Valassis began the litigation Aug. 30 in Delaware Chancery Court.
In announcing the Dec. 11 date last week, Valassis said that "Advo's request for an earlier timeline for court proceedings was based on its ... claim that Valassis' financing commitment for the acquisition expires on Nov. 30. In fact, the ... commitment expires on March 31, 2007, which is the termination date of the merger agreement."
Valassis also wants Advo, Windsor, CT, to provide greater public access to information about the case. The statement said the court instructed Advo to make public a less redacted version of Valassis' complaint.
"From the beginning we have called on Advo to waive the terms of the confidentiality agreement related to the merger, thus allowing shareholders and the public to review all of the grounds for the lawsuit," the statement said.
Meanwhile, Advo shareholders voted Sept. 13 to adopt the merger agreement.
On Sept. 8, Advo filed a lawsuit in response to Valassis' complaint. Advo seeks, among other things, a court declaration that Valassis has no right to rescind, terminate or otherwise evade its obligations under the July 5 merger agreement, and an order requiring Valassis to pay interest from Sept. 15 on the $37 per share merger consideration due to Advo stockholders.
In related news, San Diego-based law firm Lerach, Coughlin, Stoia, Geller, Rudman & Robbins LLP filed a lawsuit in U.S. District Court for the District of Connecticut last week on behalf of Advo shareholders for the period between July 5 and Aug. 30.
The complaint accuses Advo and certain officers and directors of violating the Securities and Exchange Act of 1934. It alleges that the defendants issued false and misleading statements regarding the business and financial results, concealing problems in Advo's long-term financial health and value. It also alleges that the defendants concealed this information to accomplish the merger with Valassis.
Calls to the law firm and Advo seeking further comment were not returned.