Advo Inc. said Sept. 5 that it would begin mailing supplemental proxy materials in connection with the special meeting of stockholders scheduled for Sept. 13.
On Aug. 30, Valassis commenced litigation in the Delaware Chancery Court seeking to rescind the merger agreement with Advo based on allegations of fraud and material adverse changes.
Valassis alleges that Advo management materially misrepresented the financial health of the company and failed to reveal internal control deficiencies.
Advo, Windsor, CT, said that at the meeting stockholders will vote on a proposal to adopt the agreement and plan of merger among Advo, Valassis Communications Inc. and Michigan Acquisition Corporation, a wholly owned subsidiary of Livonia, MI-based Valassis.
Advo reiterated that Valassis’ claims are without merit and nothing more than an extreme case of buyer’s remorse arising from the negative reaction by Valassis’ stockholders and analysts to the announcement of the transaction.
The lawsuit appears to be a tactic designed to pressure Advo to agree to a price lower than the parties’ binding agreement requires, the company said.
Advo said that under the terms of the transaction, Advo stockholders will have the right to receive $37 per share upon completion of the merger.
Advo’s board of directors also said they unanimously recommend that stockholders vote “for” the adoption of the merger agreement.
Advo remains committed to the transactions contemplated by the binding merger agreement and stands ready to close the transaction following stockholder approval, the company said.
The company also said it will vigorously defend itself against Valassis’ claims and plans to file an answer to Valassis’ complaint promptly with the Delaware Chancery Court, as well as a counterclaim asking the court to order Valassis to perform its obligations under the merger agreement, including consummating the merger at the agreed-upon price of $37 price per share.
