Suit Against SCANA Executives and Potential Buyer Takes Issue with Proposed Merger

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Two SCANA Corporation shareholders have filed suit against the company’s board of directors, Dominion Energy, Inc., and Sedona Corp. over a proposed merger between SCANA and Dominion that the plaintiffs claim undervalues the company and is unfair to investors.

The suit begins by discussing SCANA’s recent abandonment of a failed nuclear reactor project in South Carolina that caused the company’s stock prices to drop significantly. According to the complaint, the individual defendants knew of the project’s setbacks from the beginning – including “repeated delays, cost overruns, and design and construction issues” – but continued to assure investors that operations were running smoothly and on time. After the company announced it would not finish building the reactors, the suit continues, the truth of the board members’ alleged mismanagement and deception was revealed, resulting in a criminal investigation and subpoenas from the South Carolina attorney general and the Securities and Exchange Commission.

On January 3, 2018, only months after SCANA’s July 2017 announcement, the board of directors allegedly reported that they had agreed to sell the company to Dominion for a price the plaintiffs claim is insufficient. The case argues that the defendants “made no effort to seek a suitor willing to pay a higher price than Dominion” and neglected their duty to provide the best value to shareholders. From the complaint:

While the Board rushed to escape personal liability by inking a deal with Dominion that severely undervalues the Company, they would have been able to secure a more valuable deal for SCANA’s public shareholders if they had initiated a sales process.”

Moreover, the suit argues that the proposed deal “enriches insiders” instead of investors, noting that SCANA executives stand to receive “a tremendous payout” upon completion of the merger.

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