Stockholder Files Suit Against ShoreTel, Others Over Proposed Merger

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ShoreTel, Inc., its board of directors, Shelby Acquisition Corporation, Mitel US Holdings, Inc. and Mitel Networks Corporation are facing a proposed securities class action over allegations that they failed to disclose to stockholders material information regarding a proposed merger between ShoreTel and Shelby.

The plaintiff claims the defendants filed a Solicitation Statement that is missing details concerning the financial analyses performed by ShoreTel’s financial advisor, J.P. Morgan Securities LLC, which the suit notes is “significantly incentivized” to close the deal. In fact, the complaint claims J.P. Morgan will forfeit $5.3 million of its $7.3 million fee if the merger falls through.

The suit also takes issue with the Statement’s supposed lack of information concerning potential conflicts of interest among ShoreTel’s board of directors. From the complaint:

“The Solicitation Statement fails to disclose the timing and nature of all communications regarding the Board’s July 26, 2017 approval (the date the Merger Agreement was also approved) of a payment of cash bonuses in lieu of their annual equity grants.”

It further notes that the company’s CEO stands to receive more than $1.3 million in the transaction through the acceleration of his unvested stock.

The plaintiff claims stockholders require the allegedly missing information to determine for themselves whether they should vote in favor of the proposed transaction.