Investors are suing data center operator Switch for failing to disclose important financial information when pursuing an $11 billion merger with DigitalBridge Group and IFM Investors.
Shareholders Marc Waterman and Denise Redfield filed two separate lawsuits in the Federal Court in New York last week. The lawsuits make very similar accusations, stating that Switch withheld important financial predictions while announcing the merger to the US Securities and Exchange Commission (SEC).
What do the lawsuits want?
Redfield and Waterman urged the Federal Court to halt the transaction — or to reverse it, should Switch be successful in closing the merger — and to require Switch to release a new proxy statement that contains all material facts.
Early in May, the deal in question was made public. Switch, a company that runs data centers with high-performance computing infrastructure, said that it signed a binding contract with IFM Investors and DigitalBridge Investment Management.
This agreement, projected to finalize in the second half of 2022, would see the two investment firms purchase all of Switch’s outstanding common shares in an all-cash deal valued at around $11 billion, along with the attached debt.
Claims of fraud
Redfield and Waterman claim that Switch’s proxy statement was fraudulent and misleading. The statement allegedly violated the US Securities Exchange Act of 1934 because it withheld crucial facts about the transaction.
They specifically assert that important information about a study carried out by Goldman Sachs, one of the financial services firms functioning as the company’s financial advisor throughout the transaction, was left out.
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