SCANA, Dominion Energy Facing Securities Suit Over Allegedly Controversial Merger

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A proposed class action has been filed against SCANA Corporation, its board of directors, Dominion Energy, Inc. and Sedona Corp. over a proposed merger between SCANA and Dominion that the plaintiff claims is unfair to stockholders.

The suit begins by discussing SCANA’s controversial abandonment of a nuclear reactor project that became the subject of several investigations due to suspicions that the company and its board of directors attempted to cover up that the project was failing. The case alleges that SCANA and its board were aware that the project “was mired with serious design, construction, and cost headwinds from the beginning” but continued to assure investors and the public that everything was running on schedule.

When the company announced in July 2017 that it would be abandoning the project and the alleged issues finally came to light, SCANA’s stock prices dropped almost 40 percent, according to the complaint. Only months later, the case continues, the defendants announced that Dominion Energy, through its subsidiary Sedona Corp., had agreed to purchase the company.

The plaintiff argues that despite SCANA’s setbacks and “temporary” stock price drop, the proposed merger undervalues the company. The suit alleges that the transaction is an attempt by SCANA executives to shield themselves from liability and reap significant profits at the expense of stockholders, noting that board members will be able to cash in “phantom stock units” upon the transaction’s completion and top executives will collect “tens of millions of dollars in change of control benefits.”

The suit was originally filed in South Carolina circuit court but has since been removed to district court.