Suit Demands Rocket Fuel Release Information Concerning Proposed Merger

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Rocket Fuel Inc. and its board of directors are facing a proposed class action lawsuit filed by a stockholder who claims they filed a misleading recommendation statement in connection with a merger between the company and Sizmek Inc.

The plaintiff notes that Rocket Fuel stock prices were higher than Sizmek’s offer price when the transaction was first announced, meaning investors would be trading their shares at a discount.

“Instead of focusing on maximizing stockholder value and obtaining the highest possible sale price for the Company,” the complaint argues, “it appears that management and the Board were more concerned with the procession of the deal and their lucrative payouts that would result.” The complaint notes the total compensation for the company’s executives adds up to “a staggering $35,634,805.00,” which it claims is “equal to nearly 30% of the total deal value.”

The suit says the transaction followed “an unreasonable sales process” that possibly hindered other potential buyers from proposing a superior offer due to certain provisions in the merger agreement.

Furthermore, the recommendation statement allegedly failed to disclose details of the company’s financial projections and certain figures used in the valuation analyses performed by its financial advisor. Without this information, the suit argues, stockholders are left in the dark about whether the transaction was calculated fairly. The plaintiff says the defendants’ decision to omit this information was “reckless,” claiming that the details sought “could have been disclosed without unreasonable efforts.”