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PRA Health stockholders do not have enough information to vote on the company’s upcoming merger with ICON, PLC, including disclosure of conflicts of interest, a new class action alleges.
Plaintiff John Murphy — a PRA Health stockholder — filed the class action lawsuit against PRA Health Sciences, Inc. and PRA Health’s Board of Directors in a California federal court Friday, alleging violations of the Securities Exchange Act of 1934 and U.S. Securities and Exchange Commission rules.
PRA Health is one of the world’s leading global contract research organizations by revenue, providing services to the biotech and pharmaceutical industries, Murphy says.
His class action comes on the heels of the company and board’s attempt to sell PRA Health to ICON PLC, which was announced to investors Feb. 24 this year. Through the plan, each PRA Health stockholder would get $80 in cash and 0.4125 shares of ICON common stock for each share of PRA Health common stock they own, the class action claims.
However, Murphy says PRA Health has filed a Schedule 14A Definitive Proxy Statement ahead of the merger that is “materially deficient and misleading.”
Murphy says the proxy is missing PRA Health and ICON’s financial projections and financial analyses performed by the Company’s financial advisors, BofA Securities Inc. (BofA) and UBS Securities LLC. (UBS).
He says it is also missing potential conflicts of interest faced by BofA and UBS and the background that led to the proposed transaction.
“The stockholder vote to approve the Proposed Transaction is forthcoming,” the claim states. “Under the Merger Agreement, following a successful stockholder vote, the Proposed Transaction will be consummated.”
Murphy says, for this reason, he is seeking to prevent PRA Health and its board from conducting the stockholder vote on the merger “unless and until the material information discussed below is disclosed to the holders of the Company common stock.”
If the transaction goes through, Murphy is asking the court to help investors recover damages resulting from the alleged violations of the Exchange Act.
“Full disclosure of the omissions identified above is required in order to ensure that stockholders can fully evaluate the extent to which BofA’s and UBS’ opinions and analyses should factor into their decision whether to vote in favor of or against the Proposed Transaction or seek appraisal,” the class action says.
Murphy is seeking an order preventing the company and board from proceeding with the merger and the vote for the merger. If the merger does go ahead, Murphy wants a judge to rescind it and set it aside, or award rescissory damages to the plaintiffs.
He also wants the court to order a proxy that does not contain any untrue or misleading statements. He is looking to represent all other PRA Health stockholders who are similarly situated.
The class action lawsuit comes less than two weeks after GW Pharmaceuticals and its board of directors were accused of lying to shareholders by undervaluing financial projections so they would approve a company merger.
What do you think of the PRA Health/ICON Merger? Let us know in the comments!
The plaintiff is represented by Joel E. Elkins and Richard A. Acocelli of Weisslaw LLP and Alexandra B. Raymond of Bragar Eagel & Squire, P.C.
The PRA Health ICON Merger Securities Exchange Act Class Action Lawsuit is Murphy et al., v. PRA Health Sciences, Inc, et al., Case No. 3:21-cv-01064-GPC-BGS, in the U.S. District Court Southern District of California.
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