Inventure Foods, Inc. makes foods in the “better-for-you” as well as the “indulgent” categories, and Utz Quality Foods, LLC has extended a tender offer for the company as of October 26, 2017. However, the complaint claims that the company’s Schedule 14D-9 on the tender offer, filed with the Securities and Exchange Commission (SEC), omits material information, in violation of Sections 14(d), 14(e), and 20(a) of the Securities Exchange Act of 1934.
The class for this action is all holders of the stock of Inventure Foods who are being harmed by the actions described in this complaint.
Inventure owns many different brands, including Boulder Canyon Foods, Jamba, Seattle's Best Coffee, Rader Farms, TGI Fridays, Nathan's Famous, Vidalia Brands, Poore Brothers, Tato Skins, Willamette Valley Fruit Company, Fresh Frozen, Bob's Texas Style, and Sin In A Tin.
Utz is offering $4 per share, and the complaint for this class action claims that that price is too low, representing a 60% drop from the company’s 52-week high of $10.04 per share. The tender off expires on December 13, yet the complaint claims that the 14D-9 omits material information, particularly in calculations by financial advisor Rothschild, preventing shareholders from being able to fairly evaluate the offer.
For example, the complaint alleges that the document provides the value of non-GAAP metric Adjusted EBITDA, used by the board in the forecasts, but does not provide the value of underlying line items or a reconciliation to its most comparable GAAP equivalent.
Also, the 14D-9 reveals that the company performed a Liquidation and Restructuring Analysis, to help the board in reviewing strategic alternatives to the merger, but it fails to disclose the variables and assumptions used, such as the timing of transactions, net liquidation value of inventory, the liquidation value of assets, settlement payments to terminate leases and employee agreements, and a long list of other similarly important figures.
The complaint also calls into question Rothschild’s Discounted Cash Flow Analysis, created in support of its Fairness Opinion, which used adjustments to the company’s unlevered free cash flows (UFCF) but does not disclose the projected UFCF, the adjustments that were made, or the rationale behind the adjustments.
The complaint therefore asks the court to stop the company from proceeding with the tender offer or consummating the proposed transaction, until more complete information can be disclosed to shareholders.